The US mobile devices market is dominated by a few models. The total number of available phones to average customers at any given time is about 100. In China, there are about 2,000 phones available at any given time, according to Will Davis of COGO Group.

In the West, there are only a handful of manufacturers for a given industry. Chinese industries generally have a lot more players (hence the variety of products available to Chinese consumers).

One major reason is the sheer size of China. 

“Different regions have different tastes,” explained Davis. 

Another reason is likely the relative youth of certain Chinese industries, which haven’t reached the mass consolidation phase yet.

This fragmentation means that US businesses selling to China must tailor their approach to a large number of firms in many cases.

Davis’ firm COGO is focused on helping US businesses sell semiconductor equipment to Chinese manufacturers (business-to-business, B2B). COGO essentially aggregates the varied needs of 1,600 manufacturers in China and connects them with US companies that can meet those varied needs.

He said the services of his firm are needed and many US companies don’t mind paying for it. 

For big technology companies who haven’t established anything in China, a service like COGO makes sense, especially if the company is selling customized solutions rather than something commoditized.

Setting up operations in China in itself is a difficult enough process and those wanting to do so should be prepared to commit substantial time and resources. Contacting and maintaining relationships with many Chinese companies just adds to the difficulty.

The nature of China’s fragmented market also likely offers opportunities for smaller Western technology firms; if they can meet some specific needs of certain Chinese manufacturers, they can capture a niche market that’s neglected by bigger players.

Unlike bigger technology firms, they don’t need to sell to many manufacturers to make venturing into China worthwhile; they can get by with just a few Chinese customers.

Still, employing the services of a company like COGO may still make sense.

“You’d have to go knock on doors [and] you might not even know where to look. China is such a huge place,” said Davis.

While there are various ways to tap into the Chinese market, one thing is clear for many Western technology companies: they can no longer afford to not be in China. 

Business-to-consumer companies came to this realization a while ago and business-to-business companies are drawing a similar conclusion due to the explosive growth of Chinese manufacturers and the consumers they serve.

Meanwhile, Western technology remains in high demand among Chinese manufacturers.

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