How_to_do_business_in_China by hoadn


How to do business in China

Word Count:

It is not surprising at all when many foreign investors complained when
they do business in China. Many wondered why their years of experience in
the business world could not be applied in China immediately. Therefore
adopting the correct approach and understanding the China‟s business
culture is vital in order to be successful in doing business in China.

China market research, China market entry, market research China, market
entry China, China market entry strategy, source Chinese suppliers,
business partners matching

Article Body:
It is not surprising at all when many foreign investors complained when
they do business in China. Many wondered why their years of experience in
the business world could not be applied in China immediately. Doing
business is about building mutual trust and benefit amidst establishing
relationship with people. If you do not understand your counterpart well,
it will be quite difficult to establish good cooperation with him/her. An
old Chinese saying goes: know yourself and your enemy well and you can
fight a hundred battles without any fear of defeat. This greatly
emphasized the importance of knowing and understanding your counterpart.

Modern economic model differ greatly from the traditional one, whereby
people in the past „fight‟ till the last man standing. Today, people seek
to achieve a “win-win” situation, and pursue long-term trade cooperation
under a fair and healthy competition environment. Understanding factors
such as China‟s history, humanity and culture will be the key to
investors‟ success in China. As Western thinking and China‟s traditional
values do differ, encountering the culture differences is therefore
inevitable, thus a better understanding of the cultural differences is
necessary when doing business in China:

1. Learn how to handle Guanxi (relationship)

In China, Guanxi (relationship) is a complicated field. Establishing
relationship with others does not mainly deal with achieving own self-
interests or personal goals. A special feature of doing business in China
will be that Guanxi (relationship) in China will have to include
relationship with the government body, investors, partners and even
relationship with your own staff. China government plays a large role in
administrating the investment in China. This is because China is a
socialist state; the economy is still largely controlled and managed by
the government, so when doing business in China, it is important for
foreign investors to learn to coordinate with the China government. At
the same time, seeking a suitable local partner may be a shortcut and
helping hand in developing your business in China market.

2. How to prevail over competition

China, at the moment, can be said to be a big, open market, and the
ability to prevail over competition is a very important issue today.
Investors should fully realize and maximize one's advantages. Some
investors are afraid that the China‟s imitation products will hurt the
sale of their products. Even though this symptom is worrying, however in
a free and competitive market, it will always be one that has the
superior quality that will not be afraid of competition and will prevail
eventually. China market is constantly undergoing standardization, and
the China government has vowed to protect the quality of the market.

The Vice-Minister of the Ministry of Foreign Trade and Economic
Cooperation had previously stated in his speech that being a member of
the World Trade Organization, China government will continuously rectify
and standardize the economic structure of the market, and will
persistently crack down illegal acts of producing counterfeit products.
Technology level in China is still relatively lagging behind, thus
foreign investors should fully make use of their advantages in technology
and expertise to produce high-quality products and services. One should
not be over worried about the negative impact brought about by new
counterfeited products. Continuous development of one‟s technology and
emphasizing on innovation will be the key to success.

3. Route for Investment

There are three options to take when make investments in China, mainly:
wholly foreign-owned enterprise, Chinese-foreign cooperative enterprise
and Sino-foreign joint venture. Which option to take will have to depend
on factors such as the investors' investment direction, investment
environment, and the amount of investment to be undertaken. Generally
speaking, wholly foreign-owned enterprise require examination and
approval from many government bodies and this process can be quite hassle
and time-consuming. Government procedures for establishing Chinese-
foreign joint venture and contractual joint ventures will be even more
and the process will require even more from more government bodies. Thus
Sino-foreign joint venture appears to be the ideal investment option as
less governmental procedures and authorization time will be required.
Possibility of encountering hiccups will be smaller.

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