Dos Starting process Don'ts Do not get blinded by single short trips to China and Take your time for the market analysis and make an the impressions you made. Beijing and Shanghai are exact feasibility study. not representing China. Include the future management staff as early as possible in the planning process. Use the experience of third parties or hire experienced Chinese manager. Do not rush during the planning phase. Do not do everything on your own. You have to get to know the Chinese market before entering. Therefore a Representative Office might be a good choice at the beginning. Do not just trust one Chinese employee and one Analysis, Analysis, Analysis… Chinese partner. Define your reasons for the market entry. Define your strategy. The headquarters must stand behind the China-engagement. Do not regard China as a single market. Analyzing Dis- / Advantages of different company entities and choose the fitting one. The most simple and cheapest corporate entity might not always be the best choice. European Manager Choose trustworthy, capable and Chinese experienced manager for leading positions. Do not use China as a waste yard for disagreeable and unfavorable managers. Do not analyze the commercial capabilities of the managers alone. The multicultural capabilities are a key point as well. An unsatisfied employee is not efficient. The exact 1:1 transfer of European Management Systems is not possible. You also have to learn from the Chinese. Train the employees and their families intensively before sending them to China. Choose strong and flexible managers. Support the higher management level in China and give them enough competencies. These managers can judge the actual situation in China often better than the headquarters. The headquarters should not get involved in the day-to day business and should not patronize the local staff. Don't put Chinese at a disadvantage and do Qualification about nationality. Do choose managers Europeans at a privilege just because of the own and superiors out of nationality reasons. nation. Chinese Employees Hire trustworthy employees. Listen to Chinese employees. They know the Chinese people, the market and their peculiarities. For good staff you also have to pay high salaries in China. Do not get blinded by the ability of speaking English. Often a lot of highly-skilled employees do not speak English and work in domestic enterprises. Do not trust Chinese employees totally. Do not underpay employees. This leads to abuse especially in management positions. Employees will search for "additional earnings." Speak openly about mistakes and failures of Chinese employees and train them. Avoid staff fluctuation. Do not just follow the European virtues but also do not lose them. Do not try to keep the employees just with money. They will leave the company as soon as they get higher salaries. Avoid the secret drawers of the employees. Information are kept back so that these employees are not able to get fired. Employees must get convinced of all decisions. Introduce an incentive salary system. You will be astonished by the rise of productivity. The learning process must be institutionalized. All data must be available at all time. Organization Trust on a local management team. Separate the organization and the responsibilities clearly. Otherwise there will be conflict of powers or no employee will take over the responsibility. Supervise the finance and purchasing department strictly and search for trustworthy employees. Support the management team from the headquarters and show your support through frequent visits. Do not run a business in China just with foreigners. Do not neglect the purchasing department. There can be synergy effects with the headquarters as well. Cost saving potentials. Define the goals together with the local management Do not give the aims just from headquarters in team. Germany. Market Analyze the market regularly and adapt the strategies to the fast changing environment. Search for new The market differs in China. There are numerous possibilities. markets with different characters. Build up networks to governmental organizations and Do not encourage mistrust and keep the laws. Do not partners. bribe. Watch your competitors. Nearly all your competitors Do not think about China as a buyers market. A lot of are already in China. Pure capitalism. consum is still directed by the government. Regard the bureaucracy as challenge. Every company faces the same ones. Understand China and learn from the challenges. Do not regard bureaucracy as a disaster. Do not try to promote all markets from the beginning. Rather start with the coastal regions and work your way in. Finance Invest in China to earn profits. Otherwise it might lead to dangers for the headquarters. Have an overview over the finance system all the time. Trustworthy finance manager are a must. Analyze costs and cost structures from the beginning. Mind the small things and try to reach profits as soon as possible. The increase of prices is hard later on. The General Manager should know about something about financial statements and the tax laws. There must be enough liquid reserves from the start. Do not invest half-hearted and do not regard China as a "cash and carry" market. Do not go to China to gain market shares. Short term profits are a must. Do not just hire a cashier and outsource the rest. It is just useful for the first period. Ignorance about financing will lead into fraud. Do not transfer money all the time from the headquarters if the company is not successful. If the strategy seems not successful, close the company. Product The product quality in China must be the same as on Do not sell a worse product on the Chinese market or the domestic market. cut back the quality. The distribution and service must be taken over by oneself. Keep European quality standards and modern production methods. Use the sympathies towards German companies and take your advantage out of it. Do not destroy your reputation worldwide through a different service net, quality and services. General Be flexible and rely on the Chinese employees. Keep your patience and stamina by building up the company and by negotiations. Do not listen just on Chinese employees and follow strictly the first strategy. Do not lose patience and retire too fast. Do not take China as "cash and carry market" and do not get blinded by 1.4 billion people. Do not have different partners. Different partners means competition in the own company. Let yourself in China. Always have just one Joint Venture partner in the same business. Build up your network and Guanxi. Do not believe in a free market.
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