In a time of crisis China is increasingly an opportunity for Portuguese companies

3 May 2011

Lisbon, Portugal, 2 May – In the midst of an economic recession and the country’s fragile financial situation Portuguese companies increasingly see opportunities in China, but should be prepared for string competition, according to the Megatrends Asia research institute.

Foong Wai Fong, the institute’s director, advised Portuguese companies to “bet on the Internet and medium-sized cities,” to grow in China, “looking to the regions that have not yet come onto the radar.”

“The market of the main cities is already mature,” and, “all the biggest world brands are vying for around 10 percent of the 1.3 billion Chinese that get to the end of the month with money to spend,” the specialist told Portuguese newspaper Vida Económica.

Despite being “a big opportunity” for Portuguese companies, it is necessary to “develop a value strategy” for the different brands or groups of products,” Foong said on the sidelines of a seminar entitled, “China: The next 10 years,” recently organised by Escola de Gestão do Porto – University of Porto Business School (EGP-UPBS).

“What has been said to businesspeople is that China has a potential market of 1.3 billion people, but they forgot to say that there are also an equally large number of companies competing for the Chinese market. The whole world is there,” she said.

Trade between the two countries has seen rapid growth over the last few months, according to official figures.

In January and February Trade between Portugal and China totalled US$590 million, with China selling goods to Portugal totalling US$460 million (36.20 percent more) and buying goods worth US$130 million (37.1 percent more).

Despite several success stories of Portuguese companies in China, particularly in Macau, several specialists have warned of the difficulty in gaining access to the market.

According to Foong, “nowadays, the Chinese know very little about Portugal,” and thus the country, “will have to position itself.”

“Portuguese companies should ask what is so unique about their products, what is so special about Portuguese brands and what there is in Portugal that could arouse the interest and curiosity of the Chinese,” said the director of Megatrends Asia.

The coordinator of the Managing Internationally programme of EGP-UPBS, Ana Teresa Lehmann, noted that Asian markets, “still don’t have an importance in the international trade of Portugal and specifically the North, which is the main Portuguese export region, which reflects its current economic importance.”

Lehmann noted that there was, “growing interest in these potential trade and investment destinations,” and that there was “an enormous opportunity to be explored.”

This opportunity, she said, did not involve “low cost products,” but rather should focus on “very interesting niches,” specifically for textiles/clothing and luxury footwear, the agri-food sector (including wines), machinery and metal mechanics, engineering and energy.

“And a niche in China is like a continent in the rest of the World,” she noted. (macauhub)