Despite the country's rapid development, doing business in China requires dealing with a host of issues, many which are not found to the same degree in more developed markets.

Fragmented Markets For any product with a relatively high degree of technology, it is not uncommon for the number of global players to have been reduced to a handful of truly competitive companies over the years. However, the existence of a large and growing "local" market in China, characterized by low technology and low price, reduces the cost barriers and encourages new market entrants. As a result of this unique structure, hundreds of local companies in the China market may be making the same product that only a few companies are making on a global scale.

Downward Price Pressure The extreme fragmentation of the China market creates a constant downward pressure on prices.

Lower Affordability Standards Due to China's fundamentally different and lower "cost perspective," affordability standards are much lower than in more developed economies. Technology and products that may be reasonably priced in other markets may be outside the range of affordability in China.

Management Gap China does not have a long history of treating management as a science. As a result, Chinese managers who understand the rules of the global economy are in short supply, making it more difficult to close China's management gap and build an effective and professional local management team.

Uneven Legal Enforcement Although China has a well-developed legal infrastructure, enforcement of laws and contracts is uneven. As a result, companies must learn to resolve conflicts "the Chinese way."

Difficult to "Acquire" Market Share In order to prevent China's most important industries from being controlled entirely by foreign companies and investors, it is now difficult to acquire majority ownership in local companies with meaningful market shares in China, particularly if those companies are owned in part by the State. As a result, "acquiring" market share in China is now more difficult than it was in the early days of reform. In most cases, companies have to build their market positions in China from the ground up.