Malaysia Hotline: +603- 2141 8908
Doing
business in China means that business people will come into increasingly
frequent contact with Chinese business people and officials. It’s quite
essential for investors to know some principles for doing business in China.
Principle 1. Gaining Trust
Never
underestimate the importance of existing connections. In the business process,
you need to be dealing with a Chinese person of influence. If that person feels
you are trustworthy enough, and if they can get their network of contacts to
trust you, there is a chance you will succeed. Asians want to do business with
people they trust. But there is no real trust unless a person is in their
circle. At first, they don’t know if you will be a good partner. Show respect
by keeping some distance. Focus on building the relationship before talking
business. Do not go for big profit on your first contract.
A common
safeguard against opportunism is to build relationships of trust with persons
who matter for your business. Unlike in the West, the creation of personal
friendship is a prerequisite of doing business. Building friendship takes time,
which is another reason to avoid rushing into things.
Principle 2. Value Chinese
Business Culture
It’s
also important for business people to value Chinese business culture while
doing business in China. 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.
China is
a world away from America or Europe, and more than a world away when it comes
to doing business there. In America, contracts, deals and other arrangements
are fairly transparent between businesses working together. However, it’s not
the same situation in China. There are a lot to know if you decide to do
business in China. And make sure you know how to fully value Chinese business
culture.
Principle 3. Take Your Time
Many
companies want to get on the ground quickly. In one case, the CEO told his head
of strategy to get China operations going within six months. Time pressure of
this sort can create problems later on. It tends to result in sloppy planning
and analysis. It shifts the attention from finding the right partner to finding
any partner, regardless of partner fit. Moreover, it weakens 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.
Principle 4. Be Conscious of the
Large Picture
Most of
the growth in China since 1978 has come from private small and medium-sized enterprises.
Today, they make up about 65 percent of Chinese GDP. Moving forward,
policy-makers are keen for China to produce its own large multi-national
enterprises, and government is re-asserting its role as the key orchestrator of
these initiatives. A group of about 100 state-owned enterprises – those under
the tutelage of the State-owned Assets Supervision and Administration
Commission – is being groomed toward that end. Government ownership – or at
least partial control – and support also appear in many of the new industries
being put together under apparently local and private initiative.
You
should know whether any of these targeted firms are active in your industry. If
so, fierce competitive battles seem likely for the future, and easy access to
state money for these firms means the playing field will not be level.
Government may be on your side as long as your technology is needed. Keep this
in mind when selecting a partner for cooperation or considering market entry.
Principle 5. Recognize the Importance
of Chinese Government
Conventional
wisdom holds that China’s governmental structure is highly centralized, with
all key decisions made in Beijing. In reality, Beijing directs little of what
happens throughout the country, especially in far-flung regions. To be sure, if
Beijing truly wants something to happen, it will. At the same time, Beijing
recognizes that decentralization of power plays an important role in taking
economic reforms forward. By running things in a slightly different way, the thousands
of localities throughout China constitute a large population of local
experiments collecting information about what works. From these experiments,
the central government can select suitable future policies. Expect conditions
to vary by location. In addition, to the extent you need to negotiate with
government, it is also crucial to involve the local government.
Contact
us
If
you have further queries, please contact Tannet
24
hours Malaysia hotline：603-21418908;
24
hours Hong Kong hotline：852-27837818;
24
hours Hong Kong hotline：86-755-
36990589;
Email:
mytannet@gmail.com
TANNET GROUP : http://www.tannet-group.net, http://en.tannet.com.my