China Has Untapped Market for Multi-National Companies

MU expert urges U.S. companies to consider keeping door open to China's middle class

Nov. 19, 2008

Story Contact:  Kelsey Jackson, (573) 882-8353, JacksonKN@missouri.edu

COLUMBIA, Mo. – As the effects of the U.S. financial crisis trickle throughout the rest of the world, people have started to reconsider the meaning of a global economy. When the U.S. markets start to fall back and enter a recession, global markets have the potential for growth. A University of Missouri expert predicts that multi-national companies that invest in growing midmarkets, such as China’s middle class, will diversify risks and increase profitability.

“While the U.S. markets are going through a financial crisis, multi-national corporations will likely benefit if they increase their presence in China and make a strategic effort to sell in China,” said Shaoming Zou, Robert J. Trulaske, Sr. Professor and associate professor of marketing in the MU Robert J. Trulaske, Sr. College of Business. “Currently, most multi-national companies only cater to the premiere market in China, the upper-middle class, by offering standardized premium products. However, the upper-middle class is small compared to the larger market, and there are millions of people that companies are currently not targeting.”

Although the bulk of the Chinese population is not overly wealthy, most people are able to afford everyday staples. To target this midmarket, companies must invent new ways of doing business and change their views and strategies, Zou said. This includes offering more affordable and reliable products.

“The United States should not close the door to the global market,” Zou said. “If companies use the skills they gained from investing in China and deliver them around the world to similar midmarkets, the potential for sales is huge.”

Professor Zou's research interests are in global marketing strategy, export marketing and international market entry strategy. Professor Zou’s publications include articles in Journal of Marketing, Journal of International Business Studies, Journal of the Academy of Marketing Science, Journal of Advertising, Journal of International Marketing, International Marketing Review, Decision Sciences and others.

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