GLOBAL-PRENEURING

Made in the USA, purchased in China? Small businesses must prepare for China’s powerful consumers.

UPS SERVICES IN CHINA

UPS offers a range of services to help businesses deliver to China. In 2005, the company became the first carrier in the industry to acquire direct control of its operations in China. Last year, the company expanded its international express service to 22 more business locations in China, bringing the number of cities served in the country to 330. Expansion continues.

UPS, which celebrates its 100th anniversary in 2007, is the world’s largest package delivery company and a global leader in supply chain services. Headquartered in Atlanta, Georgia, UPS serves more than 200 countries and territories worldwide. UPS’s stock trades on the New York Stock Exchange (UPS) and the company can be found on the Web at UPS.com.

To find out more about Chinese consumer attitudes toward American products, the complete UPS survey is available at: www.pressroom.ups.com/chinasurvey.

The media reports regularly about American consumers buying Chinese-made goods. But less frequently talked about is the growing number of Chinese consumers looking to buy American products.

China offers American businesses tremendous opportunity. By 2025, urban households in China will be one of the largest consumer markets in the world, according to McKinsey & Company projections.

Many small businesses are leading the way in selling U.S. products in China. According to the Department of Commerce, 90 percent of all U.S. exporters to China are small-to-mid-sized companies. If you’re not one of these businesses, you should be. Without a strategy to reach China’s consumer market, you stand to dull your competitive edge.

Chinese consumers buy American products—and they want to see more of them on store shelves. For two years, UPS has conducted a survey of urban, middle class consumers in China—often known as “Chuppies”—to help its customers do business in the world’s fastest-growing economy. The most recent survey reveals what American products are most popular among Chinese consumers. These include DVDs and CDs, moisturizer, athletic shoes and blue jeans.

To be successful in China, small businesses must target a specific niche. Like U.S. consumers, China’s consumers are not a single, monolithic market. In fact, China’s 1.3 billion people live across 3.7 million square miles with multiple climates and speak countless dialects. So when it comes to selling products in China, one size doesn’t fit all.

The China consumer survey found purchasing preferences that varied by age group, gender and geographic location. For example, younger consumers are drawn to imported products. And young, male consumers in particular say that American products connote status.

As consumers in China have more choices than ever, they often look for the best products—not necessarily the cheapest. More than 85 percent of Chinese consumers in the survey said that quality is a critical factor in their purchasing decision. More than half of consumers surveyed said that they want to hear messages about quality ingredients or workmanship in ads for U.S. products. This number was even greater for healthcare and apparel products.

Opportunities for small businesses will continue to grow as Chinese consumers use credit cards and shop online more often. More than half of consumers in the survey said they use credit or debit cards for shopping, and 40 percent have shopped online. But 84 percent said that they expect their card usage to increase or remain the same in the coming year.

5 tips: Exporting to China

1. Get in the know before you go
Research is the critical first step for businesses seeking to export to China. The federal government’s export portal is a comprehensive source of China trade information. It answers commonly asked questions and gives businesses a quick quiz to assess whether they are “China-ready.” You can find this on the Web at http://www.export.gov/china

There are many other Web-based resources, and a good one is from the U.S.-China Business Council, which supports U.S. businesses in China and offers news and other resources for U.S. firms. Its website is: http://www.uschina.org

2. Pick the right partners and adopt their networks
Partnerships are the key to doing business is China. Small companies can get ahead by using the existing infrastructure and relationships of buyers, distributors and transportation companies. A good source for potential partners is the U.S. Commercial Service at http://www.buyusa.gov/china/en/programs.html.

3. Make smart shipping choices
You can reap significant savings if you use ocean transport to send lower-value, non-urgent shipments between the United States and China. Also, some transportation companies can make things even easier by consolidating shipments to save time and money.

4. Automate and integrate
Pick a transportation provider with technology that is specifically geared to help small businesses keep track of exports of all sizes. Technology that tells you where a shipment is before you even ask, or alerts you to customs delays, can help you make more informed decisions and serve your customers better.

5. Available financing
It’s well worth it to explore a range of financing options for small business exporters. One interesting choice is through the U.S. Export-Import Bank, which assists in financing the export of U.S. goods and services.

For more information, go to www.exim.gov.