Market of one billion becomes reality

BEIJING, April 26 -- James McGregor believes the much-heralded one-billion-customer China market may at last be becoming a reality.

The bestselling author on China business says that far from being too late for foreign companies to enter China, there may never have been a better time.

"Foreigners have always had the dream of the China market, the hundreds of millions, if not a billion, customers. The truth of the matter is that that reality is starting to approach. There is actually a huge and growing consumer market in China," he said.

Reaching the Chinese consumer has been something of a holy grail for international businesses, even when the country had only 400 million people in the 1930s.

McGregor, a former chairman of the American Chamber of Commerce in China, said with the country's middle class expanding fast, tapping into a huge market could be a realistic goal for companies with the right strategy.

"There is no market like China in the world. It is a continental-sized market that has another billion people to reach the middle class. If you develop a product here and could scale it up enough, you can be a global winner," he said.

McGregor, who wrote One Billion Customers: Lessons from the Front Lines of Doing Business in China, said foreign companies do not have an automatic right to a share of this cake.

"The Chinese consumer market has started to emerge. How big a piece of that foreigners are going to get remains to be seen. China is full of extremely capable and hardworking business people who understand their own people's wants and desires," he says.

McGregor, who is now a senior counselor in Beijing for the worldwide strategic communications group APCO, says foreign companies coming to China face stiffer competition than they did even five years ago.

"It is a much more competitive market than it used to be and it is going to get tougher in some sectors," he said.

He said one of the problems faced by foreign companies, particularly since the start of the economic crisis, has been provincial governments trying to protect indigenous businesses from outside competition.

"You have a time now where there are a lot of local governments protecting their local companies and discriminating against foreign companies. The foreign business community certainly feels that way," he added.

McGregor says the immense power of China's State-owned enterprises can make life very difficult for anyone wanting to do business in the country.

"State-owned enterprises are very powerful. They have access to capital and they have the relationships here that bring them a lot of business opportunities. I think even some Chinese private entrepreneurs have concerns about the recent emphasis on State industry," he said.

McGregor, a former journalist, came to Taiwan as bureau chief of the Wall Street Journal in the island in 1987.