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Many businesses in the UK dream of cracking the Chinese market, with its allure of massive sales potential. However, those who have succeeded have found the going to be tough. But don’t be put off.
When doing business in China, the ability to navigate cross-cultural issues is just as important as the goods and services you bring to the marketplace.
This is true whether your company is just now considering the China market, recently gained its first sale or maintains an in-country presence.
The key is to learn the rules of the game and stick to them. Here are some basic starting points.
If a potential Chinese partner feels you are trustworthy enough, and if they can get their network of contacts to trust you, there is a chance you will succeed. Focus on building the one to one friendships before talking business. Using communications methods such as the mobile app WeChat and the online chatting tool, QQ, greatly increases your chances of getting Chinese people on your side.
Face is an important aspect of the Chinese national psyche. Chinese people will ensure they won’t cause themselves embarrassment in front of colleagues and friends and especially on subjects and topics of discussion they are not sure about. If you fully understand this- you have a better chance of cracking the Chinese market. This takes time and patience- once you visit the country and become friends with Chinese people it will become clearer.
Explain your position in clear, concise words. State your terms clearly and respectfully. Then be prepared to walk away if your terms are not met. Keep in regular contact with your potential partners. However, be aware that once they are interested they will want information quickly. They tend to be “here and now” people. The whole process is longer term than many other export markets around the world.
Prepare for every interaction. Do not count on your ability to wing it. Do simple things well. There is potential for losing face if you have not fully prepared your full China strategy. Make sure your facts are 100% accurate in every detail, to ensure credibility. Do not present an idea or theory that has not been fully researched, proven, or studied beforehand.
Set realistic timescales. When looking at the China market it can be anywhere between 18 months to 3 years before a sale is made. Time pressure can create problems such as the rush to finding the right partner regardless of partner fit. Rushing at it might also weaken your hand in negotiations. Your Chinese counterpart will know how to use your time constraints against you, and you will walk away with a worse deal. Patience and persistence pays off.
You need to be dealing with a Chinese person of influence. Decisions are made at the top. You are unlikely to seal deals with middle level managers.
To protect your intellectual property, use the same due diligence you would in the UK. It is a first to file system- you need to register a Chinese name for your business at the earliest opportunity. The filing process takes around 18 months to complete
China is not a single market. Look at Hong Kong and Shanghai as a starting point and then work your way in. Localisation within different provinces is important. Many industries in China resemble the beer industry, with overcapacity, high levels of fragmentation, subsidised local competition, and foreigners willing to absorb losses from their “strategic” investments.