China's domestic market is rapidly becoming the Asian economic jewel that foreign businesses are scratching their head attempting to come to terms with. According to the Financial Times, one in two air conditioners in the world are made in China, as are one in 3 TV sets. Staggering numbers. In Shanghai every other person (in a city officially of 14 million -- unofficially more like 20 million) has a mobile phone. Shanghai has the largest market penetration in the world for this technology.

The landscape is changing very rapidly. The rules and regulations are opening the door for foreign businesses, as reforms and phasing in of WTO mandates have their effects. A booming real estate market in major cities spur domestic spending that China has not seen in in decades. The multinationals are here and spending their money to develop relationships and establish a market share. So where does this leave small foreign businesses who want to expand their market? Is there enough room to play?

There is a gateway to China for small businesses. There is still a lot of room if you go your homework. The experience of Maureen Russell, president of RM Waite, is an oft-quoted success story for small business market entry you can read here. It takes doing the homework, finding the right local partners, and seeing that your marketing mix is localized. It is doable and the potential rewards are huge. It has to be done right.

For a small business, there are a few things you can do. Of course, it depends on your goals, your product and your capital available for opening a market. You will need to do your homework. It does not have to be expensive. You may be surprised how little it takes. If you want to produce your goods inexpensively, there is an army of Chinese factories here waiting to talk to you. Most are taking the steps to provide good quality control, get ISO 9000 ratings, and be extremely competitive. If you have a product or service you think would do well here in China, you need to find a partner here. You need to come and check it out.

You might think, " I do not know the language, the culture, I might get ripped off." Yes, like I said, you need to do your homework. The State Department of Queensland, Australia has these pieces of advice for doing business. This just scratches the surface.

• With one billion consumers China is a potentially large export market, however consumer characteristics, economic growth and distribution channels vary greatly between regions in China. The Chinese market should be viewed as a multitude of separate regional markets.
• There are several key densely populated areas of economic growth, which should be considered when determining the most suitable regional entry point into the Chinese market. These include Greater Guangdong (Guangdong, Fujian, Hainan); Greater Shanghai (Shanghai, Jiangsu & Zhejiang); Beijing (Hebei, Beijing, Tianjin, Shandong); and the north-east (Heilongjiang, Jilin & Liaoning).
• Companies should harness knowledge and experience from easier markets in the region first and be prepared for the long term commitment required to enter the Chinese market
• China is a highly regulated economy, make sure you know the proper procedures, rules, regulations and protocols.
• Personal relationships or Guanxi are crucial to business success in China. Introductions should be arranged through the right channels. “Mutual Trust” is the basis for Chinese commerce.
• Choosing the right Chinese partner is essential to business success in China. A good Chinese partner will have connections and a good understanding of the informal and formal regulations and bureaucracy.

That is assuming you set up introductions with people who can help you. Finding the right partner is important. But many small business are doing it and help is available.

Over the next few months, we will go into a little more detail on a few of the areas touched in here, so check back often. If there are particular questions you have, email us or leave a comment on this article.

So how do I take the first steps? If you do not have contacts here now and you want to investigate the viability of doing business here, there are companies that can help you establish yourself, assist you with language, navigating government channels, market research, and the details of getting set up. We can put your in touch with people who are trustworthy, relatively inexpensive (unless you have a big budget), and know the types of services a small business in China would need.