In China, for China
US companies focused on customizing their products to meet demands of Chinese consumers, keen to gain more ground in various industries
My advice for forthcoming US companies is to be aware of what is different about consumers here. You can’t assume that the product you have in the US will attract people the same way here. You will need to adjust it.”
As the common saying goes: “When in Rome, do as the Romans do.”
American companies in China have been quick to subscribe to this way of thinking, as evidenced by the 2015 China Business Report released by the American Chamber of Commerce in Shanghai.
According to the report, US companies are continuing to pursue an “in China for China” strategy, with 67 percent of companies stating that their top priority in China is to produce or source for goods or services for the Chinese market — a record high response. This includes designing unique products and services for the China market.
“US companies are trying to learn more about how Chinese consumers shop and what they look for,” said Kenneth Jarrett, the president of AmCham in Shanghai.
General Motors, for example, tweaked the design of the backseats in its cars so that they would be more comfortable — Chinese people often have their most important guests sit in the back. Another American brand, Oreo Cookies, has adjusted the flavors of their products to suit the Chinese palate.
“My advice for forthcoming US companies is to be aware of what is different about consumers here. You can’t assume that the product you have in the US will
Kenneth Jarrett, attract people the same way here. You will need to adjust it,” said Jarrett.
According to Jarrett, most members at AmCham have a positive economic outlook despite the current slowdown in China, with almost half of the respondents (44 percent) predicting positive five-year growth prospects, while 45 percent of them estimated that annual growth in their primary market sectors will be moderate (6 to 10 percent).
“However, they are trying to adjust their business plans to deal with the challenges such as managing their margins and being efficient so that they can continue to be profitable,” he said.
Of the challenges faced by US companies in China, Jarrett pointed out that Chinese government policies continue to favor domestic companies in the banking and insurance industries.
Over in the information technology sector, US companies have been concerned about proposed policies that will limit their ability to sell to their Chinese counterparts.
He claimed that about 63 percent of US companies in China agree that such regulations are worsening over time and hinder their businesses, a jump from the 58 percent reported in 2013.
“We believe that the current relationship between the US and China is mutually beneficial. Healthy and open engagement between the US and China is good for both countries,” said Jarrett.
“There are areas of differences, but this is quite natural. What is important is that these differences are also discussed openly and with a view toward finding common ground. US companies are expecting to be treated the same way as Chinese companies, which will give greater confidence to investors and encourage more companies from the US to do business here,” he added.
president of AmCham in Shanghai
Kenneth Jarrett, the president of AmCham in Shanghai, believes that the US and China have much to gain from a healthy and open engagement with one another.