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6
| Suitable for Growth
Preface
China is extreme. And doing business in China is extreme. At first glance, the market looks
very attractive, as it is large and growing very fast, particularly in the mid-market
2
. How-
ever, when taking a closer look, entering China becomes scary with daunting barriers and
fierce competition to overcome. In other words, the Chinese mid-market has an extreme
duality of opportunities and challenges.
F
uture economic growth in China will lift hundreds of mil-
lions of consumers into the middle class and this in turn
will drive the demand of industrial products in the B2B
market.

However, many companies find it very difficult to move down-
ward to this market segment, with lower prices and margins, but
also much higher volume. Almost by default, Danish products
and services tend to target the more niche-like premium and
high-end segments of the market.
Over the past decade, several larger Danish companies have
shown how it's possible to achieve a profitable and sustainable
position in the Chinese mid-market. However, Danish SME's
still have difficulties truly exploiting the unique and histori-
cal business opportunities that the Chinese market presents.
Instead, SME's tend to invest their resources in the more
familiar Western markets ­ missing out on the opportunity to
grow in emerging markets, even though developed markets are
stagnating or in decline. This is worrisome for the individual
companies, but it is also critical to the Danish society because
Conditions are quite different in the high, mid and low segments of the Chinese market. The figures above describe the
segments of one particular industry in China as seen from a Danish B2B company. Danish companies from several different
B2B industries confirm that the figures are typical.
Clearly, the potential in the mid-market is huge ­ this is where the main growth is happening now and in the near future.
Price
Index
Share of
totalmarket
Overall
growth
in segment
Share of
company's
sales
100
10%
10%
95%
50
45%
50%
5%
20
45%
10%
0%
High
Mid
Low