five principles to conduct better business in china

FIVE PRINCIPLES TO CONDUCT BETTER BUSINESS

IN CHINA

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For additional information about Business with China

please visit www.China-Business-Connect.com

www.China-Business-Connect.com

The dynamic economy that is China has been luring Western companies for decades, but recently it seems that more companies are taking the plunge.

With a relatively untapped market and a growing middle class, there are plenty of consumers that need a wide variety of products and services.

Most businesses have found that it is more challenging to adapt to the difference in the business culture.

The following principles to give your business the edge it needs to survive and thrive in China.

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1. DO YOUR RESEARCH PRIOR TO NEGOTIATIONS

Most companies are attracted by the potential of the Chinese market and don’t do the required research that is required to have a real chance at success.

They are following their industry without making the connections and learning the lay of the business culture.

Subsequently, there is a whole sector of business consultants that have grown up around fixing all of the companies’ mistakes as a reactive course of action; versus just getting the data and analyzing it before even thinking of entering China.

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2. BEWARE OF LOCAL INDUSTRIAL DYNAMICS AND SUBSIDIES

One of the biggest reasons that companies experience a loss in China is due to underestimating the competitive landscape; both local and other foreign firms.

Expect to face stiff competition from hundreds of local competitors, which may be subsidized and better received, as well as a growing number of foreign businesses.

It is wise not to expect the landscape to change much in the future as legal and business structures are slower to adapt in China.

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3. GATHER DATA AND ANALYZE WITH PATIENCE

Don’t rush the natural progression of business and negotiations with potential partners just because you want to be in the market quickly.

Chinese business people will use this time pressure to gain favorable terms in partnership negotiations and could lead to committing to a deal that isn’t beneficial to your company.

Set realistic guidelines and use the time to get to know the culture and start making connections with other foreign as well as Chinese companies.

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4. CHINESE SOCIETY IS CLAN BASED

Most businesses confuse the concepts of collectivist for socialist, but Chinese society is based more on helping who they know for social points and favors that will aid them later.

Getting into this special form of network building will allow you better access to key decision makers and increase your odds during the negotiations.

This will also make doing business in the area easier with law enforcement or other regulatory agencies. Often your Chinese counterpart will be working towards zero-sum competition where one party wins and the other loses, but with the appropriate network building you can shift this tendency.

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5. TRUST IS HARD TO GAIN AND EASY TO LOSE

Within the Chinese society, trust is not given until it is earned and they rarely trust people outside of their business network.

Combined with the preference to do business with their network only, their lack of a well-functioning legal system has opened the door for opportunistic behavior, such as reneging on contract clauses.

Keep this in mind when you are negotiating and build in your own safeguards.

Also work to develop your own network of Chinese business people to gain trust and improve your business success.

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For additional information about Business with China please visit www.China-Business-Connect.com