Delivering Projects In China’s Tier II Cities

By Engage Asia 

 

While China’s top-tier cities are already largely developed there are far more second-tier cities across the country that are growing rapidly. These cities present opportunities and challenges.  

 

The economic drivers for these cities include: central government stimulus; business investment; new infrastructure; modernisation; large local populations; the influx of new skills and aspirational talent; and lower costs. While useful to assume similarities between these cities, there are also considerable differences in their economies, populations and consumer trends.

 

There are also specific challenges for internationally headquartered companies, including:

• Suppliers used elsewhere in China or internationally may not have distribution agreements in all locations, especially with service providers

• Service providers may be unavailable or inexperienced - a fundamental issue in delivering corporate standards and quality

• Locations and facilities may not be ideal for foreign managers and families. Language barriers can make communication with senior management more difficult

• Local rules, laws, regulations (and their enforcement) as well as taxes will vary, and need to be understood. Incentives from local governments can be misleading

• Property oversupply in some cities could mask a local downturn

 

Conclusion: Tier II Cities Are Tier I Engines of Growth

1. A cautious, risk-based approach is needed. China’s Tier II cities represent a fragmented market with significant differences between cities and regions.

2. Technology may be global but local delivery is key. Due diligence on partners is important to meet corporate and international expectations. Partnering companies that understand the market and have already delivered projects successfully is beneficial.

3. Project management oversight and closer communication can ensure mutual understanding with no surprises.

 

About Engage Asia

Engage provides professional and trusted advice to private and public sector clients, consulting on information technology and digital services as well as security, risk and business resilience. Our specialists have worked with a broad range of companies on world-leading business, risk and design projects across the globe. We help realise new opportunities, manage risk and reduce costs, generating value and business resilience.