For the last 30 years or so, I have regularly travelled to China to work with Chinese investors, entrepreneurs and business leaders who have various interests around the world. Doing business with them is never easy and throws up some unique obstacles and, whilst I think I’ve learnt a lot from being on the ground, I still feel I’m learning all the time! However, here are the three biggest lessons I’ve learned from doing business in China so far:
1. Relationships before transactions
Those of us who do business in China understand that, in order to gain the trust of a Chinese investor, partner or buyer from which a business relationship can flourish, you need to invest in building relationships first before proceeding to any type of deal or transaction. This means that you need to leave the quote, proposal or contract in the drawer, and take your Chinese guests out for lunch, exchange gifts, tell stories and laugh a lot. I refer to this process as drinking “Three Cups of Tea”. You’ll be surprised how old fashioned relationship-building can lead to real business opportunities if you listen more, talk less and focus on building the relationship rather than the transaction.
2. China is not one market
China is not one market, its many markets, each with different characteristics, opportunities and challenges, and the place you start (even if it doesn’t end up being the place you finish) should only be decided after doing some proper research and an evaluation of different market entry options. Otherwise, you’re “hoping for the best’ which isn’t the way you would approach a new market in your home country, and definitely won’t work in China!
Amongst many other things, your market research should include:
- An evaluation of the characteristics of different markets and customer segment
- A review of different industry clusters in first and second tier cities
- An understanding of the regulatory environment which can be different in each province
- A competitor analysis, especially in relation to pricing, positioning and messaging
- An overlay of your existing preferences, contacts, friends, connections and likely support
- And many more
Only when you’ve done the research and you know what you’re doing should you start talking to potential clients, partners, investors and/or distributors.
3. Take a leap of faith
As a guest in their country, and a foreigner who doesn’t speak their language, you are basically prey to the dynamic and changing environment around you and, despite your normal instincts and judgement, you would do best to relax, take a deep breathe and go with the flow. To do otherwise is to show a weakness which will not go down well with your hosts who are desperately trying to please you.
I am not saying this is easy (if I had a dollar for every time plans have changed at short notice, for no apparent reason, and I’ve wanted to walk out, scream and/or get on the next flight home…) but I’ve come to realise over many years that a willingness to “take a leap of faith” is an inevitable, essential and necessary aspect of achieving success in China.
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