Some thoughts on doing business in China

Some thoughts on doing business in China…… (海归论坛 www.haiguinet.com)

1) In Japan, it takes a long time to negotiate a contract, but when it is signed, it is virtually fixed in stone. In China, it may take a short time, or a long time, to negotiate a contract. When it is signed, it is the beginning of further negotiations. (海归论坛 www.haiguinet.com)

2) When the foreign company is setting up its China operation, it should think about the market, not what is convenient for the organisation. Too often, China is divided into “North China”, run out of Tokyo, and “South China”, run out of Hong Kong. However, the market for many products is organised like this: 3 main cities, (Beijing, its political heart, Shanghai, its commercial heart and Guangzhou, its industrial heart), then the coastal provinces, and then the inland provinces. The organisation should organise itself to meet the market. (海归论坛 www.haiguinet.com)

3) A key point is, if the goal is to sell to the China market, the product must meet local requirements. Even in products such as bicycles (which the mainland produces in excess of demand), money can be made with the right product (e.g. mountain bikes). (海归论坛 www.haiguinet.com)

4) If in your negotiations, you meet a Chinese who is not very well dressed, has a bad haircut, seems brusque, speaks no English and sits at the back of the room, do not assume that he has no authority. He may be the most important person in the room! (海归论坛 www.haiguinet.com)

5) The 3 P’s continue to be the key to successful dealing in China, PATIENCE, PERSISTANCE and PERSPIRATION. (海归论坛 www.haiguinet.com)

6) Ben Franklin said, “Haste makes waste”. In China, an important message is “Haste will make it more expensive for the foreign party”. (海归论坛 www.haiguinet.com)

7) One word, LISTEN. Listen to what the Chinese side says. Listen carefully and you will learn their objectives, where they are flexible or not. Do not try to impress the Chinese with how much you know or who you are. Talk half as much, and listen twice as well. (海归论坛 www.haiguinet.com)

China is full of inconsistencies. Two examples. It is a classless society, yet it is very hierarchical, with much attention being paid to titles, seating at banquets and “face”. In China, everything is a “secret” and subject to unpublished “internal” regulations that can’t be shown to the foreign party. At the same time, there are no secrets in China. Truly. (海归论坛 www.haiguinet.com)

9) Do not take anything at face value. There is almost always a hidden agenda. (海归论坛 www.haiguinet.com)

10) At the core, if a deal makes economic sense for the Chinese, they will ensure that the deal gets done. If it is a transaction based on non-economic factors, somewhere in the approval process it is likely to be killed.