NEW YORK — In the coming years, China doesn’t just have the potential to become the world’s factory. With a population of 1.28 billion, it could become an enormous consumer market.
But China’s arcane legal system and sometimes inscrutable business style can make breaking into the market a tough challenge for U.S. marketers.
New York consultants Jassin-O’Rourke Group and Shanghai-based consultant George E. Williams have joined forces in an effort to help U.S. companies take the plunge into selling into China. Williams recently established a licensed wholly owned foreign enterprise called Nan Ying Consulting (Shanghai) Co. Ltd. to act as an agent and adviser to U.S. firms.
“Many people know that China is hot,” said Williams, who works with his wife, Nan Ying, who previously served in the Chinese government in Wenzhou. “But few people know what is going on in China.”
U.S. brands often join forces with Chinese manufacturers with which they’ve done business when trying to crack the Chinese market — a move that seems logical given there’s already an established relationship. But for some U.S. manufacturers, these deals have turned sour.
He noted that many U.S. apparel executives know little of the Chinese way of retailing. Most fashion goods in China are sold through company-owned boutiques. These can be either freestanding stores or shop in department stores, which lease space to brands and then take a cut of revenue off the top, typically from 25 to 35 percent, Williams said.
“We bring a Western discipline on quality, on what you can do in a strategic alliance, on what image a Western brand wants to project at retail,” he said. It’s important to keep a close eye on what’s being done with a brand in the Chinese market because, he explained, “Lawsuits in China are not necessarily a fruitful endeavor.”
Williams said there are estimated to be between 100 million and 300 million people in China classified as “middle class,” which means they have annual income of $8,000 to $10,000. China’s per capita gross domestic product was $4,600 in 2002, according to U.S. government data.
This story first appeared in the April 10, 2003 issue of WWD. Subscribe Today.
Financial terms of the partnership between the two consultancies were not disclosed, though both parties said they’d be steering clients to one another.