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Throughout the past year China has announced its plans to open industries to foreign companies. Since the Shanghai free trade zone was introduced in September 2013 China has made many attempts at opening up parts of the economy in hopes of stimulating economic progress in the country. Within the Shanghai zone the government is testing free trade in Chinese currency as well as allowing interest rates to be set by market forces. This provides a great opportunity for foreign companies who wish to harness the mass market China provides.
The main areas China is opening up to foreign companies are the telecom, internet services, and video game console industries. China is allowing full foreign ownership in five areas including call centers and home internet access, as well as allowing the sale and manufacture of foreign company gaming consoles in the country. These new changes do come with some restrictions however, companies looking to offer their services in China must base companies in the Shanghai free trade zone, as well as gaming consoles sold domestically in China must be built in the Shanghai free trade zone. This could have a drastic change on many global companies who now want to harness this new opportunity. It may cause companies to relocate and modify current supply chains in order to sell and provide services in China.
Companies with the opportunity to gain from this include Nintendo, Microsoft and Sony. China provides a vast market for these firms and it will be interesting to see how they will use the new marketplace to their advantage as well as the impact it will play on current and future business plans and company sales. Please feel free to leave a comment below on how you think China will continue to open up to the global business world and what you think the next big change will be. Also stay up to date on everything in China by clicking here to navigate to the country insight page on globalEDGE.
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