Tips for doing business in China
With rapid economic growth in China, many American and European companies are now interested in entering China to expand their business. Unfortunately, because of differences in language, culture and governmental systems, the Chinese market may seem complicating and frustrating to foreign companies. However, once a good understanding and relationship is established, doing business in China may prove easier than expected.
Here are a few tips for doing business in China:
1. Contract professional business advisors who are familiar with the business, culture and language in both China and Western countries. The advisor should speak both Chinese and English, so they can conduct local market research, arrange your Chinese trips and support your business negotiation. Before establishing any relationship with Chinese partners, you should consult your advisors, who can use their extensive network to identify local partners and even build up relationships with government officials if necessary.
2. Be aware of the Chinese business culture, which is very different from what foreign companies are familiar with. Chinese people have a tendency to integrate their personal and work matters when conducting business.
Developing relationships is vital to succeed in China. The Chinese words “guan xi” indicates any type of relationship or network; it could be on a personal, business or governmental level. It is common to leverage someone’s close relationships while conducting business. This is why Chinese people often put a lot of efforts into socializing and building relationships with their counterparties before talking about business issues. Sometimes, foreign investors prefer to talk about business before socializing. For Chinese people, it is actually all part of doing business.
3. Do not overlook the potentials and threats from domestic markets. Domestic industries continue to gain market share in China, creating higher brand awareness and loyalty. Besides state-owned companies, private businesses are actually strong competitors in China, with flexible business approaches and local market knowledge. Foreign companies need to pay attention not only to competitors of the same level, but also to smaller local enterprises that are gradually expanding.
4. Find a local partner in China. This is the faster and less risky way to enter China. Local partners would communicate well with Chinese, understand the Chinese market well, and have pre-existing relationships that you can leverage. Through the partnership, you gain first-hand knowledge about the Chinese markets and test your products. Depending on your growth needs, you may then consider establishing your company as a wholly-owned foreign enterprise.
Here are a few tips for doing business in China:
1. Contract professional business advisors who are familiar with the business, culture and language in both China and Western countries. The advisor should speak both Chinese and English, so they can conduct local market research, arrange your Chinese trips and support your business negotiation. Before establishing any relationship with Chinese partners, you should consult your advisors, who can use their extensive network to identify local partners and even build up relationships with government officials if necessary.
2. Be aware of the Chinese business culture, which is very different from what foreign companies are familiar with. Chinese people have a tendency to integrate their personal and work matters when conducting business.
Developing relationships is vital to succeed in China. The Chinese words “guan xi” indicates any type of relationship or network; it could be on a personal, business or governmental level. It is common to leverage someone’s close relationships while conducting business. This is why Chinese people often put a lot of efforts into socializing and building relationships with their counterparties before talking about business issues. Sometimes, foreign investors prefer to talk about business before socializing. For Chinese people, it is actually all part of doing business.
3. Do not overlook the potentials and threats from domestic markets. Domestic industries continue to gain market share in China, creating higher brand awareness and loyalty. Besides state-owned companies, private businesses are actually strong competitors in China, with flexible business approaches and local market knowledge. Foreign companies need to pay attention not only to competitors of the same level, but also to smaller local enterprises that are gradually expanding.
4. Find a local partner in China. This is the faster and less risky way to enter China. Local partners would communicate well with Chinese, understand the Chinese market well, and have pre-existing relationships that you can leverage. Through the partnership, you gain first-hand knowledge about the Chinese markets and test your products. Depending on your growth needs, you may then consider establishing your company as a wholly-owned foreign enterprise.