Posted by: changholt | June 14, 2019

Five keys to doing Business in China

Even though the US and China are on the edge of a trade war (where no one wins), China and the U.S. will continue to do business together (the two largest importers and exporters in the world). So, how do we particpate in this booming economy?

Here are 5 keys to do business in China, successfully – even in uncertain economic climates.

  1. China is not one market. The population is quickly approaching 1.5 billion consumers. However, at HSI, we break it into 6 key macro regions: greater Shanghai, greater Beijing, greater Guangzhou,  the Sichuan basin, the greater Northeast, and the greater Northwest.  Each of these markets, has its own unique characteristics and can easily be broken down into multiple other micro-markets.
  2.  Understand the business culture.  Like in all cultures the key is respect. Respect their culture, their customs, and that their language. In China, they have a few unique cultural habits that have been developed over thousands of years of history, such as “guanxi”  ( a sophisticated network of relationships to get things done )  and “face”  (understanding of the social and business hierarchy).
  3.  Research, research, and more research. In essence, look before you leap.  Not only is it a large potential market, it is full of risks as well. Are you working in the correct market? Are you targeting the correct target market? Who is your competition? Who will be your competition in 2 years? How does the government view your industry and foreign participation in the market?  You should never change your business strategy in China, because you will move away from your core competency. However, you should try to adapt to certain “Chinese characteristics” to better suit the needs of your final consumers and customers.
  4.  Bureaucracy and money.  Although capitalism is in full swing in China, the government still has its bureaucratic procedures. You need to have patience to succeed. You don’t want to run into China, just because your Board of Directors is pushing you or the latest Wall Street Journal article recommends it. You define the right market, and work with that government agency. Then need to find the right partner, and work within that framework. I think too many companies move too fast in China and get frustrated and make bad decisions.
  5.  Localize.  You are only as good as your local team.  and your Chinese team is worth every dollar you invest in it. This might be the most difficult step, becuase it requires deep levels of trust. Localization is easy to “say” but not so easy to “do”.

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