Pacific Trade International's Mei Xu: Marketing to China

What kind of opportunities are there for American small businesses in China?
If you go to Shanghai, there are all these European small business people from places like Holland, England, and France. They're from small countries, so they are born with a trader's mentality. They know there is not much to lose and so much to gain in China. Americans often think only about market share in their own country.

How is China different from the U.S. for an entrepreneur like you?
It's very fragmented. There are no national chains like Target (TGT) or Wal-Mart (WMT). But there are 10 cities with more than 10 million people, and in Shanghai there are more than 20 million. If you open 10 stores in Shanghai, you can have a brisk business. You just have to pick the right battles.

What mistakes do companies make in China?
A lot of people think, "There are 1.5 billion people in China. If I sell each of them a set of forks and knives, I'll be very rich." But even a major company such as McDonald's (MCD) had trouble because they insisted on selling hamburgers. Chinese people didn't eat beef. You have to acknowledge life is different.

How does a home products maker such as you woo the Chinese?
We had to design a whole new product line for China. Americans like candles that smell like cookies. Women burn them in their homes so their husbands and children come home and think they have been cooking. The Chinese like floral scents.

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