China: A Giant That Is Hard to Crack

China in 2015

Fact box

Population 1,375 million

GDP per capita $7,808

GDP $10,736 billion

Economic growth 6.9%

Investment +10%

Industrial production +6.1%

Unemployment rate 4.1%

Fiscal balance -3.5% of GDP

Public debt 79.4 of GDP

Inflation PPI -5.2%

Exchange rate vs USD 6.49

Exports $2,283 billion

Imports $1,681 billion

External debt 13.2% of GDP

source: FocusEconomics

Lukáš Hlaváč

About Lukáš Hlaváč

Lukáš Hlaváč is the Founder of Whoolala, an online marketplace that enables its users to discover and share their fashion sense. He is also a consultant helping foreign businesses to grow and manage operations in China since 2009. He previously worked at Czech Lasvit and more recently as a business development manager in China. He has two masters degrees, in Informatics and Business Administration and is fluent in Mandarin, English and Czech. Twitter: @HlavacLukas

With an average growth rate of 10 per cent over the last decade and an increasingly affluent population of 1.3 billion people, China is a dream market for many companies, including those based in Central and Eastern Europe.  Small and medium firms are excited by the prospects of the Chinese domestic consumption because Chinese consumers are literally hungry for goods from the EU. In the past five years, exports from the EU to China have grown by 9.8 per cent, to €160 billion, while exports from China to the EU have only increased by 1.6 per cent.

I have lived in China, since 2009, from the time we successfully introduced the Czech lighting company Lasvit onto the Chinese market. It has been an arduous journey and the success came at a high cost and is still relatively limited, given the scale and potential of the Chinese market. This is why my advice is to shake off any infatuation with unlimited opportunities, before trying to do business in China, and to explore the country with extreme care and attention. 

The Chinese market has always been an uneven ground for foreign enterprises. Succeeding in China requires that SMEs make a long-term commitment and that they allocate the appropriate resources in order to overcome the many challenges that foreign firms face in the Asian Giant. 

I speak and write fluent Mandarin, but I am still slower and need more time to analyse the enormous amount of information from the market every day, than a smarter Chinese native. China is the most dynamic market in the world and the business landscape changes at an extremely fast pace. Entrepreneurs need to be able to navigate the newest technologies and trends to be able to take advantage of them, at the earliest stages, so that they can get the highest possible return on investment.

It is fairly easy to register a company in China these days. The entire process takes around 30 days and costs roughly €3,000. It is more difficult to obtain the many licenses you may require for your particular business and may take much more time and cost more than expected. I have been trying to get a license as an internet content provider in China, for my latest project, for the past 14 months and have not succeeded, even though the process is supposed to take around three months. 

Particular businesses require documents that are hard to obtain, such as social networks, user generated content based platforms, SaaS providers, banking, finance, FinTech and media (especially video content). It is far less complicated to operate companies in the consulting and manufacturing industries, as well as food and beverages, in China. My advice would be to think twice before entering China, unless you have strong governmental ties or a lot of time and capital.

In addition, the Chinese legal system provides a framework for intellectual property protection. It may take one-two years to register your trademark in China. The process is extremely slow and provides little protection in the incredibly dynamic Chinese market. A good example of how this works is the recent case of Apple’s losing in a Chinese patent fight.

The Chinese market is the most competitive market in the world. Chinese companies are extremely agile and fast in copying what works elsewhere. When you enter China and experience early signs of success, be ready for stiff competition and to burn money just to acquire market share. This has already happened to giants as eBay or Uber and SMEs with limited capital resources are even more vulnerable.

Entering this giant market is not cheap. Many SMEs that I have spoken to, that are interested in entering China, mostly underestimate the investment necessary to win over the Chinese customer. The entire population of emerging Europe is less than 200 million, which accounts for just 15 per cent of China’s people. Reaching out to these consumers is costly.  Besides that, in China, everything takes longer than expected. Even a six month delay in acquiring the required licenses can result in hundreds of thousands dollars spent on overheads, while waiting for approvals to start the operations. 

Last but not least, as the Chinese economy overheats, there is an extreme shortage of talent. Top Chinese talents are attracted mainly by the dynamic Chinese tech giants such as BAT (Baidu, Alibaba, Tencent) and multinational Fortune 500 companies. This can help young people to turbo-charge their carriers and build guanxi (a network of social contacts). SMEs have little chance of attracting the best talent, unless they give out shares or overpay their hires. 

I believe that only companies with strong, competitive core competences, or a unique product that is not available locally (and that is hardly possible), should consider entering the Chinese market. The management of SMEs from CEE needs to make a strong long-term commitment and dedicate the appropriate resources in order to succeed. SMEs may need to look for a local CEO, who understands the local business landscape. Companies need to be ready to offer higher salaries, compared to the CEE, together with employee options’ schemes, in order to attract top talent in China.


The views expressed in this opinion editorial are the author’s own and do not necessarily reflect Emerging Europe’s editorial policy.


Political Tensions Rise As Croatia Allegedly Breaks the Dublin III Refugee Regulation

croatia migrants

Business Moving Forward with Cautious Optimism — Can Investors Win the Confidence Game?

Slovenia’s Presidential Election: Pahor Expected to Romp Home

Slovenia flag against blue sky waving in wind

United or Divided? Europe in the Face of the Challenges of Tomorrow

When Neutrality Isn’t an Option

President of the Russian Federation Vladimir Putin

Poland’s Confusing GDP Growth

Czech Republic Renaming Has Real Economic Costs

Not All Quiet on the Eastern Front

We, the Post-Communist Generation, Have the Skills to Rid of the Past And Create Our Own Future

Prepare for a New Europe

A New Division Between Eastern And Western Europe?

The Right to Water: Who Can Change Today’s Situation?

History as Destiny? Institutional Erosion in Ukraine and Poland

Belarusian Journalists Still Face Huge Problems

Poland’s Drift Away From Democracy

Breaking With Imitations of the Past

Adam Smith’s Warning for Poland

European Volatility Makes Economic Development Slower for Ukraine

Fiscal Policy Predictability in CEE — It’s Time for Change

Czech Own Currency Insures Against Euro Losses

Euro Czech republic emerging europe

Europe Needs To Be More Proactive In Embracing Armenia

How strong is V4?

Viktor Orban

PiS Uses Media Control to Bring Poland to Heel

Jaroslaw kaczynski pis emerging europe

EU Visa-Liberalisation Strengthens Georgia’s Pro-Western Path

georgia emerging europe eu

E-lifestyle and Cyber Security: Some Views From Estonia

Cyber Security Protection Firewall Interface Concept

Azerbaijan: The Rich Get Richer and the Poor Get Nothing


Nagorno-Karabakh Conflict Moves from Frozen to Kinetic


Stuck in Neutral: Georgia’s Constitutional Reforms

Tbilisi Parliament Georgia

2018 Elections — Vital Decisions for Hungary’s Future

Victor Orban energing europe

Will a Two-speed European Union Side-line the Visegrad Four?

Albania’s Election Apathy

tirana albania

Under Promise, Over Deliver: Prospects for the EU’s Eastern Partnership in 2018

Eastern partnership

Is there any prospect of ‘Polexit’?

poland european union polexit

The Capital Markets Union: a New Beginning in the European Financial Sector?

Hungary and Israel: the Collision of Past and Present

Budapest synagoge

Falling into Old Ways in 2017? Ukraine’s Struggle for Functioning Economic Institutions

After 25 Years of Restructuring, the Romanian Power Sector Is at a Crossroad

Big Fish, Small Fish, Where to Fish? On the Eve of the Fourth Industrial Revolution

Central and Eastern European Consumers Are Joining the Global Trends for Change

The Netherlands’ Objection to the Ukraine-EU Association Agreement could be Costly to Europe

Poland’s Capital Saturation Lower Than the Czech Republic’s

deloitte fdi poland

January Kicks Off an Exciting Year for Emerging Europe

Are Labour Shortages Driving Economic Growth?

Will the New Five-day Visa-free Regime Encourage More Visitors to Belarus?

Poland Challenges the European Identity

Poland emerging europe

Bulgaria Needs a Reform-Oriented Government to Take Full Advantage of its EU Membership

bulgaria emerging europe

EU-CEE Is Still Growing at a Healthy Rate

Prague emerging europe

Macedonia’s Controversial Coalition Government

SKOPJE MACEDONIA emerging europe

CEE — Do We Need a Launch Pad For Our On-Site Tech Intelligence in the Silicon Valley

The EU’s Benign Neglect Of Eastern Europe

Brexit: Let’s Learn the Lesson and Hope a Better Europe Will Arise

Poland’s Unicorn, Slovakia’s Flying Car and the Future of Europe

A Positive and Modern View of Entrepreneurship

The Long Tail of Global Expansion

Hungary’s Nationalist Assault on Free Enquiry

victor orban ceu

The GREAT London Food Scene

Bakery in London

Partnership is the Key to CEE-Indian Business

Is the CEE Region About to Steal the Outsourcing Crown From India?

Amazing view on the Taj Mahal in sunset light with reflection in water. The Taj Mahal is an ivory-white marble mausoleum on the south bank of the Yamuna river. Agra Uttar Pradesh India.

Ex-Transition Economies’ FDI Recovery

dollar euro fdi

The Global Outsourcing Industry — the Rise of the Phoenix

How Will Trump’s Visit Affect Polish Politics?

Donald trump

Polish Tax Laws — Fighting a Winning Battle Against Tax Evaders

LGBT in CEE — A New Acceptance Is Being Born From Migration

Only a United Opposition Can Defeat Poland’s Ruling Law and Justice Party

Classical building of Polish parliament. Warsaw in Poland.

The Voice of European Business Must Be Heard Loud and Clear by Brexit Negotiators

Swimpassing Dniester Without Prejudice To Democracy

Parliament of the republic of moldova in chisinau, national flag, stefan cel mare street, spring time with blue sky

The EU’s Choice: Fundamental Reform Or Disintegration

Let’s Stop Wasting Time Redefining our Place in Europe

Why Hungary’s New NGO Law Is Harmful for Business

Budapest, Hungary. Aerial view of the old city Budapest, Hungary with river and Parliament Building with cloudy blue sky

Resignation in Ukraine: War, Revolution, Crisis — Some Things Never Change

Belarus 2020: Turning the Vicious Circle Into an Upward Spiral

Defending EU Values in Poland and Hungary

Eu hungary poland

Poland: Is it Ready, and is it Time to Adopt the Euro?

Will Poland Leave the European Union?


The CEE Region Is Making Advances in Prioritising Waste-to-Energy Projects

Europe at Odds over OPAL and Nord Stream 2

Measuring Growth of Societies with GDP Alone Shows an Incomplete Picture

Romania Surviving the Waves of Recent Political Tsunamis in Europe

Old Fashioned Skulduggery Overshadows the Elections in Moldova

Emphasising the Incongruence Between the V4 Countries

Macron emerging europe

Is the Level of Foreign Ownership a Problem in Emerging Europe?

Flags of European countries flying from their capital cities. Viewed from the South.

The Sharing Economy Could Bring New Business Models to CEE

Changing Perspectives and Showing That True Romania is a Vibrant Innovative Country

CEE-Benefits and Disadvantages of Joining the Eurozone

forint zloty euro

People Power Reminds the Government of the Rule of Law

Outsourcing in Germany: Stop Talking at and Start Talking to

Moldova Falls Victim to Politicising

moldova emerging europe

How Will Poland Approach the Brexit Negotiations?

Finalising the DCFTA is Expected to Bring Multiple Benefits to Ukraine

Ukraine’s Reputation for Cheap Labour May Not Ring True in the Long-term

Regional Relations in the Western Balkans: Moving Beyond Folklore

Bosnia and Herzegovina flag with Serbia flag, 3D rendering

Could the West At Least Help Ukraine To Insure FDI Against Political Risks?

International Women’s Day — Let’s Take Action And Then Celebrate

The Morawiecki Plan Promises a Brighter Future for Poland

Global Expansion in the Digital Age

A Bosnian Referendum Shows Russia’s Influence in the Balkans—As Well As Its Limits

Impact of Brexit on EU-CEE Not Overstated

theresa may brexit

Serbia’s New PM Is Cut From a Familiar Cloth

Serbian flag emerging europe

Can Armenia Keep a Foot in Both Camps?

European union armenia russia emerging europe

Where’s My Cheese? – The GREAT British Food Tour 2014

Cheese Shop

Examining How a Strong Swiss Franc Could Single-Handedly Topple Poland’s Economy

The Competitive Edge in Central and Eastern Europe

SOFIA BULGARIA - MAY 5: View of the Ivan Vazov National Theatre in Sofia on May 5 2016. Sofia is the largest city and capital of Bulgaria.

Good Match But Unlikely Marriage

Are There Differences Between How Tax Regulations in Poland and IAS Treat Intangible Assets?

Poland Needs to Cling to the Eurozone

zloty euro emerging europe

After Its Significant Rise the Georgian Economy May Now Fall

Panorama of Tbilisi, Georgia in sunset rays. Vivid, saturated, splittoned image.

Leave a Reply

Your email address will not be published. Required fields are marked *