Which Countries is China Doing the Most Business With?

China’s role as a leader in the global economic space is well-established, with the country radically transforming since the economic reforms and ‘opening up’ policy of the late 1970s.

Since the reforms, China has experienced rapid economic growth, and is now considered one of the top countries for businesses wanting to expand and invest internationally.

However, if a foreign company makes plans to break into the Chinese market, it’s essential to know what’s happening in the market, and your entry strategies will need to be concise.

Why China?

China is the largest country in the world by population, so there is a fast-growing consumer market due to the increased number of middle-class consumers.

China’s market is beginning to focus more on high-end consumer goods and services, as well as taking a particular interest in innovation. This means there are significant opportunities for companies across the globe looking to break into the market.

With this in mind, it’s easy to see why the Chinese government wants to rebalance the economy away from investment-led growth towards consumption.

Export power

According to the International Trade Centre’s statistics, China is the world’s largest exporter, trading US$2.5 trillion worth of goods in 2019, when global exports stood at US$18.7 trillion in the same year.

China's export levels have fluctuated from 2016 - with US$292 billion worth of exports in 2016, US$281 billion in 2017, US$303 billion in 2018, to US$280 billion last year.

In the table below, you can see the top 10 countries China made exports to in 2019.

It’s also important to understand which products are proving to be China’s most popular exports if your business hopes to strike up some sort of partnership with China in the future.

China is a leader in the field of international machinery trade. With this being realised, it’s obvious that China offers a strong competitive advantage within the machine-related category.

There are some changes to the above table, with optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus parts moving to sixth up from eighth in 2019.

Similarly, articles of apparel and clothing accessories, not knitted or crocheted moved down to ninth place from seventh. And finally, toys, games and sports requisites are a new addition to the top 10 - bumping organic chemicals off the list.

Positives of doing business in China

Available skilled talent

Every year, more than six million students graduate from Chinese universities, with the highly educated workforce growing year on year.

Most grads are bilingual in Chinese and English, meaning graduates can be an asset to organizations in the east and west. The skilled employees can create, manufacture, and provide goods and services that can compete in global markets. What foreign companies have to consider is how to retain them.

Attractive market

China’s population exceeds 1.3bn people and also boasts a larger land mass than the US. This means China offers up a huge potential market for foreign goods and services.

Foreign companies of all shapes and sizes, including first-time entrants to the China market with no previous experience, as well as large Western multinational companies, find the market in China an attractive one.

The new China has evolved and is associated with the middle class more so than ever before. Although this in turn means higher costs for foreign businesses, the profit margins for said businesses are higher than anywhere else in the world.

Better Supportive Policies

The government in China has adjusted tariff policies on imported products which benefits foreign companies hoping to sell products within China’s market.

The Chinese government has also made changes to regulations, laws, and policy documents in accordance to the requests of the market economy which aims to create a fair, just and open market.

This article was updated on 18 March 2021.