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TheStreet Open House

The Small Biz Gateway to China

Now is the time for small businesses to consider entering China, at least according to Mark Whistler, coauthor of Investment U's Profit from China .

"It's as simple as GDP," Whistler says. In China, "you're talking about an economy growing 200% more than the U.S.," and with more and more Chinese companies competing for U.S. business, "communication and product quality have never been better."

Continued globalization, along with more dependable and efficient businesses in China, have spurred the savviest of U.S. corporations to take up a presence in the Asian country.

"Small-business owners who haven't looked into the possibility of moving or contracting to China could simply be missing a great opportunity," he points out.

TheStreet.com recently asked Whistler more about this huge potential for small businesses.

TheStreet.com: What are the benefits of a small business looking to enter the Chinese market?

Mark Whistler: Before the new millennium, China was difficult to tap for small businesses. But with its membership to the World Trade Organization in 2001, China has made much progress toward opening trade and business lines for huge multinational corporations and small businesses alike.

Second, the blistering growth of China's middle class ... is creating a surge of consumer spending that rivals any other country in the world. Case in point, sales of mobile phones in China increased 40% year-over-year in 2006. Because China was late to the party in terms of imitating American-like spending habits, residents are now lustfully coveting consumer goods.

With more than 1.3 billion consumers, China's numbers speak for themselves, and given that the savings rate in China is somewhere around 30%, there's plenty of expendable cash to go around. Keep in mind, it may be hard for many businesses to capitalize on this pool of consumer cash unless their products or services have a low enough cost basis to compensate for product pricing and exchange rates.

Third, the low cost of labor, plain and simple. For manufacturing, China's hard to beat. Goods are inexpensive, and labor is even cheaper.

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