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EU and China markets Entry Factors
Although the European Market does not have restrictions and internal borders, it is
crucial to note that the market is differentiated and lacks specific demand and supply
requirements since they differ from state to state (Laufs, 2014). However, EU market has
access to skilled population and high-quality life. The living standards of the people makes
their spending habits high. Some of the main factors to know before entering EU market are
the choice of the region, understanding the country’s regulations, and understanding the
regions. EU has a system of administration that is transparent and single supervisory
framework which increases the simplicity of entry and operation of new businesses.
Moreover, since EU market is comprised of large cities, it is easy to choose which
market to join. It is critically important to be near your customers in order to serve them well.
Additionally, the regulations for various businesses are varied. For instance, the supervisory
needs governing the beverage, pharma, and food sector are complicated than the rest of the
regulations. Also, getting work permits for new people who do not have a valid Europe
passport is not easy in most parts of Europe, compared to China. Additionally, unlike China,
the culture of the people in Europe is diverse. The culture of people is among the main factors
that influence their spending habits. Additionally, since the market is shared by various states,
there are 11 different working currencies and 24 various languages which are official and
working (Laufs, 2014). Therefore, any firm that wants to join the EU market should be ready
to deal with all these complicated factors, which in the China market are not common, since
the markets are in one state. New Relic is among the many companies that successfully
entered the EU market.
Any successful entry of a firm into a new overseas market is depended on the
available circumstances and conditions. A number of factors have to be compared before a
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firm enters a new market. Some of the factors to consider include the market size,
competition, resources, entry barrier, and the culture of the people. In contrary to the EU
market, China has the largest population in the world and has a larger land mass compared to
other countries such the USA (Ambler, 2016). Therefore, its market size makes it uniquely
challenging for new companies that want to sell their products there. Although it has a huge
market for international firms, it is extremely challenging for these companies to find the
resources and identify where the opportunities are.
First of all, China is neither a homogenous nor a uniform market. The social set up
and economic development of the China market is not uniform. Uneven economic growth
rates in various parts of China have made the different provinces economically and socially
varied. For instance, there are extremely big differences amid various provinces in relation to
“per capita GDP”, average levels of income, the spending habits of the consumers, rates of
literacy, education levels, levels of population, and the people’s lifestyle (Ambler, 2016).
Consequently, China represents separate markets which are varied in economic, cultural, and
demographic factors.
Additionally, the nature of various China markets is considerable varied, in contrary
to the EU markets which are made uniform by the common regulations. Therefore, any new
firms entering these markets should carefully consider the geographical location that has the
most attractive point to enter the wider China market (Ambler, 2016). Most firms which
entered China earlier were majorly attracted to the towns on the coastal regions because of
their populations and high-income levels. IKEA is one of the firms that has had a successful
entry into the Chinese market.
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References
Ambler, T., Witzel, M., & Xi, C. (2016). Doing business in China. Routledge.
Laufs, K., & Schwens, C. (2014). Foreign market entry mode choice of small and medium-
sized enterprises: A systematic review and future research agenda. International
Business Review, 23(6), 1109-1126.
