Then the advantages and disadvantages of entering the Chinese market are described and analysed. Finally the comparison of benefits and drawbacks leads to a certain recommendations. The result of the analysis is that Chinese market is extremely attractive for investors; however it contains certain risks and dangers, which should be considered during the strategy development.
China has succeeded in strengthening its economy in recent years. The growth of about 8% annually has become a trend in the last 5 years. Assessment of the year 2004 has shown that overall measures are even better than in previous years. "Gross domestic product growth in the People's Republic of China accelerated from 9.3% in 2003 to 9.5% in 2004, the highest level since 1997, even though the Government took several steps to damp sectors that it considered overheated" (Asian Development Bank, 2005, p.20). The country continues to improve its economic measures rapidly, which of course must be seen as a positive factor when considering investment.
Further on the development of external trade in China is seen by analysts as an extremely positive trend. China has already outrun the Japan to become the third largest merchandise trading country right after the USA and Germany. "Merchandise exports rose by 35.4%, with production at foreign-funded enterprises estimated at about 58% of exports. Merchandise imports grew by 36.0%" (Asian Development Bank, 2005, p.20). China's participation in WTO was followed by political reforms of reducing import tariffs and removing non-tariff barriers. All these trends along with strong domestic and external demand make China extremely attractive as an opportunity to invest funds.
Pharmaceutical Industry in China
Positive general economic trends have also influenced the pharmaceutical industry of China. The analysis of performance in 2004 has shown that "China's pharmaceutical industry continued to maintain a momentum of steady growth, achieving a stable rise in both output and sales revenues. Exports maintained a stable growth and there was a continuous improvement in the industry's international competitiveness" (Research in China, 2005). Chemical preparation industry has showed the greatest uptrend among the industry segments, while the raw chemical material industry grew slowly. Overall tendencies of 2004 indicate the shift from the race for greater market shares to more complex and comprehensive competition based on various factors.
While the evaluation of recent performance of Chinese pharmaceutical industry has shown a considerable positive momentum, the forecast for this industry are even more optimistic.
Despite the challenge of operating in China, it is the fastest growing pharmaceutical market, rising by 28% in 2004, versus 7% global growth. It is currently the ninth largest pharmaceutical market but at current growth rates China is likely to overtake Germany and France by 2015. (Business Insights, 2005)
The government of China has realised the importance of pharmaceutical industry to the national economy and has taken pharmaceutics under central planning. Initiated reforms have influenced the pharmaceutical industry positively.
Chinese medicine market is still poorly developed but it shows great potential due to its rapid improvement rate, which is by far one of the best in the world along with Indian. "China has made considerable progress