Anyone who has been to China for business purposes or has done business with Chinese people will likely talk about possible secret formulas or some hints to the less experienced. We do not think any magical recipes will solve any problem; however, there are genuine differences between Chinese and Western business habits. Knowing these differences and creating a strategy accordingly might help you conduct your business smoothly.
Here are our ten golden rules of doing business in China:
As much as any other country, of course, there is the law, a legal system, and bureaucracy. In China, you will be bind to Chinese laws, and you will be subjected to Chinese customs and traditions as well. However, it would be best if you always kept in mind that everything is possible in China. You can always find a way to work with your problems; there is still a solution. It is crucial to remember because no matter how much you will prepare or how well you do your homework, you will always encounter a problem.
As we just mentioned, no matter what you do in China, you will always face an unexpected problem. Sometimes, it will be a document that the officials did not mention or a feature that the seller has failed to tell you about the product you are procuring. Chinese bureaucracy and the legal system are among the most complicated globally; unfortunately, it is not very welcoming towards foreigners. Therefore, you should expect to have a problem at some point. If you haven't encountered a problem yet, you are either about to face it or did something wrong.
Everything is digital in China to the extent that it feels like living in science fiction almost. Every part of life is very much digitized, and IoT is more advanced than anywhere else in the world. You have to think about the significance of your business; there is a possibility that your products may remain quite out-of-date for the Chinese market. Your potential business partners might ask you about your e-commerce strategy, or they might find your skills inadequate for the changing new world. There could be thousands of possibilities.
Entering to Chinese market requires a whole different new level of marketing strategy. In a society where people order their groceries from a laundry machine, you cannot assume that your TV ads will be sufficient to increase your brand awareness and re-position you in the Chinese market. Every business in China needs to be mindful of Chinese culture, the latest technology trends, and consumer behavior on a micro level.
Guanxi translates to English as relation or relationship. Most foreigners understand it as "you scratch my back; I scratch yours." However, this is an extreme understatement. Guanxi is about your potential to prove useful in a network and your potential to play it almost like a strategy game. You do not go to a potential business partner and say, "Hey, if you give me this, I will give you that," or bring gifts and expect them to do a favor for you. It is more like slowly you build an alliance, and your reaction, relationship with other people shapes that.
When you contact a potential Chinese business partner, it is very likely that at some point, your partner will ask you whether you like Chinese food, China, Chinese tea, it can be anything. Refrain from saying what you think, and answer the question with a mild compliment. It would be best if you let the dialogue continue its natural course. Any edgy comments or criticisms may force your counterpart to hold a defensive stance all of a sudden. It may be the most natural thing for you not to like Chinese food, but when you say it to your Chinese business partner, you may receive a passive-aggressive comment on Chinese cuisine's history and diversity. So do not let the arguments snowball if you want to finish a successful session of sales.
Bargaining is undoubtedly an art. Mastering the details of a successful bargain will affect your future in the Chinese market. For example, when you start to hear a series of compliments about your business and the potential of a future partnership from your Chinese counterpart, do not get your hopes high. They are not interested in doing business with you. However, when you hear some complaints about the quality of your product or the price, it's your signal for a business opportunity. It is most likely, your potential partner has already started bargaining, and you need to keep up with him. Also, before buying anything in China, you should be mindful that the prices you are told are bubbled with the expectation that you will bargain.
Changing industrial balances and goals set within the new development plan cause dynamics in the Chinese domestic market to be reshaped almost always. Once a low developed city may become the center for the government investments all of a sudden. It is possible to see some companies receiving huge incentives from the local governments and becoming overly competitive with the new policies. Furthermore, governmental development plans lead industries and sectors to be divided among different cities and regions. Therefore you should always keep a China specialist to evaluate your strategy before entering the Chinese market.
In a dynamic market, complicated even more with a complex system of legal, cultural, and interpersonal relationships, acting & adapting is the key to survival. No business in China is completed unless it is finalized. As mentioned earlier, you are likely to face many unexpected challenges, and you will need to act quickly to find them. You should be able to handle overly eager inquiries and reluctant offers together with a fast decision-making system. Your ability to act fast will also determine your reputation in the market greatly as it will decide whether you can solve problems efficiently or not.
Penetrating the market, overtaking your competitors' market share, closing sales, and sourcing the products you want to buy is no easy task in China, as much as anywhere else in the world. China is continuously going under a change in every aspect. Furthermore, numerous elements cause this change. Therefore, don't expect any formula to work right away. You need to train your team, learn about your sector, know the dynamics, and speak the Chinese people's language.
If you would like to learn more about doing business in China, please check our blog regularly. However, know that a detailed strategy requires a detailed plan that only capable and experienced teams can handle. For that, you can contact GlocLink Consultancy's China experts, and we can discuss how we can help you together.