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Turley’s Top
Ten Tips on Doing Business in China
Do your due diligence twice
The scouts are right: be prepared. Some firms believe that China
is so different and so opaque that they cannot obtain the information
they would usually require, so they enter the market without it.
This is foolish. It is difficult to perform due diligence in China,
but not impossible.
Choose the right partners
Before you settle into a long-term relationship, take time to get
to know your potential partners. Visit their facilities. Talk to
their employees, clients and competitors. And remember that your
partners are not just the firms you want to joint venture with,
but everyone you do business with: your distributors, your customers,
your suppliers and your advisors.
Pay attention to “guanxi”
A lot is said about Chinese “guanxi” (relationships).
Most of it is garbage. Relationships are important everywhere, not
just in China. The key things to remember are that good guanxi is
a network of relationships with people at various levels across
a broad range of organizations and that guanxi is created and cultivated.
A partner whose “guanxi” consists of a single relationship
to a key government official is usually not a good partner-you want
to be supported by a complex web, not a single string. With manners,
diligence, courtesy and goodwill, you can construct your own web
of supporting relationships.
Don’t be afraid of the short-term
Many U.S. firms are attracted to China by its long-term potential.
Long term plans are great, but the rapidly changing Chinese market
often presents excellent short term opportunities. American firms
should not be afraid to avail themselves of an opportunity that
may disappear in a year or two.
Be flexible . . .
China is unique. Where else can you find “a socialist market
economy with Chinese characteristics”? The Chinese legal and
regulatory regime can force firms to find creative solutions to
business problems, but China is large enough and growing rapidly
enough to be worth some flexibility.
But don’t be afraid to say “no”.
The Chinese market may not be right for you. Your products may
be too advanced, subject to prohibitive tariffs, banned from import
or otherwise unsuitable for this market. Know what your bottom line
is. China is changing so rapidly that the idea that you must be
in China today to compete in fifteen years is rubbish. Being out
of the market is better than losing money in the market.
China is not a single market
From Harbin to Haikou, from Canton to Kashgar, China encompasses
diverse topographies, climates, cultures and peoples. There are
five languages on the Chinese currency and Chinese “dialects”
(such as Shanghaiese or Cantonese) are actually mutually unintelligible
languages. Provinces and cities compete fiercely for investment
and trade, and regional protectionism is a big problem for Chinese
firms-let alone foreign firms. To help you take a regional approach,
U.S. & FCS has offices in five cities in the PRC and one in
Hong Kong.
Get professional help . . .
Don’t sign a contract or agreement that hasn’t been
reviewed by a qualified local attorney. If you need office space,
hire a professional realtor. Reputable, reliable, professional service
providers are increasingly available in China, so use them.
. . . and hire an interpreter
Interpretation and translation are professional skills that firms
neglect at their peril. Being bilingual does not qualify one to
interpret and having your professionally written, carefully conceived
product literature translated by a graduate student from a local
Chinese university will not impress your clients. If communication
is important to your business, hire a professional interpreter.
Be polite
Be tough, be firm, but be polite. The two most important words
in Chinese are “xie xie,” which mean “thank you.”
Learn them and use them. Often.
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