China's accession to the World Trade Organization is a significant global occurrence. China is poised to become an economic superpower, profoundly affecting the globally competitive capabilities of small and multinational corporations alike.
China offers astonishing growth and exploding domestic market promise. What will it take to go after this spectacular market?
Below, two experts discuss their insights about selling in China successfully.
Dr. Tamara Monosoff is founder of ScoutAsia, a pan-Asian consulting company headquartered in Hong Kong and subsequently relocated to the United States. The company provided industry research, logistics management, and access to a network of expert consultants for companies and organizations seeking to expand into Asian markets. Currently, Dr. Monosoff operates Mom Inventors, Inc., based in Walnut Creek, California.
1. Know the market. There are tremendous business opportunities in China, but don't assume that Chinese buyers aren't looking at other options. Your product or service may need to be altered to fit local needs or interests. Senior executives in Asia are quite accessible, and time spent meeting people before entering the market is essential. Government and quasi-government organizations have considerable influence in Asia and can assist you. Additionally, there are consulting and free services available to make introductions.
2. Use Hong Kong as your base to enter China. The most notable advantages of using Hong Kong as a starting point into China are the availability of a reliable legal and financial infrastructure; a 15% flat tax rate; the ease of establishing a business entity; and experienced local tri-lingual (English, Mandarin, Cantonese) executives and consultants who can be hired.
3. Learn about Chinese culture. American and Chinese negotiation styles are dramatically different. Properly handing your business card (with two hands) and using a Mandarin or Cantonese greeting will go a long way toward showing and earning respect. Contrary to the American style of working deals, negotiations in China are largely dependent on relationships and consensus decision making. One American executive nearly killed a deal in Hong Kong when his Chinese counterparts allowed three signing deadlines to pass. But the deal was finalized by allowing additional time for consensus building, making some minor contractual changes and offering a price that ended in the “lucky” number “88.”
4. Leverage an existing relationship. Work with a company that already has a Chinese presence; however, be aware that international marketing partnerships are effective in Asia only when you build relationships and work directly with your partner's local staff. Cultivate “zhongjian ren” (the intermediary) because a gifted Chinese go-between is indispensable even after an initial meeting takes place.
5. Assist your family of companies. Many Chinese companies would like to enter the American market. If you can come up with a way to assist them, they may be more willing to bring you into their network. The person with the best “guanxi” (personal connections) thrives.
Chinese-born Di Wu-Hlawek is a graduate of Harvard Business School and currently works for Verizon Wireless in Chicago.
6. Take care of the people who make introductions. Maybe someday you will help them out. Or, if you can justify paying a referral fee up front, mention it. They may say no, no, no. If you think it's a good idea to thank them in such a way, insist on it. Like many nationalities, the Chinese are not as straightforward as Americans are—no doesn't mean definitely no. Two Chinese can carry on the insisting-and-refusing game for a long time before one party gives up.
7. Bend the rules while sticking your neck out. Most rules can be bent for special situations for special people. If one is persistent, has endurance and is patient, one is more likely to affect the outcome. And although the Chinese might not respond to your communications and may act as if they are uninterested in what you are offering, remember this: it is your effort that gets noticed, and often the effort is far more important than your offering.
8. Slow your pace. Meetings with potential partners over lunch and dinner are also occasions to recognize the slower pace of Chinese business. Meals in China are usually longer than what foreigners are accustomed to. Be patient and flexible. The time spent with people is a worthwhile investment that will pay off in the future.
9. Be courteous. Courtesy and discretion are paramount. No Chinese would be eager to deal with people—whether online or offline—who do not respect their way of living and conducting business. Also, be careful with your opinions on politics and government. The Chinese may not want to share with you what they really think about the government policies unless they are very close friends of yours.
10. Create desirability. Building a large and profitable presence in China requires top-quality products that are affordable to the masses. Creating desirability is an absolute must. You have to get to know your customer to determine which of your products offer the greatest consumer appeal and fit best with the local culture.
Resources
- USA Trade—the USA's best site for international trade—then go to the specific country you wish to do business with: for example, China
- The China Commercial Brief, published by the US Embassy in Beijing, a weekly publication that offers summaries about developments in China's various commercial sectors, tips on doing business in China and US Embassy news. This invaluable publication is free of charge. To subscribe, go to www.buyusa.gov/china/en/ccb031017.html
- United States of America China Chamber of Commerce
- The United States Embassy in China
- United States-China Business Council—the principal organization of US companies engaged in trade and investment in the People's Republic of China
- South China Morning Post—Asia's Leading English News Channel
- China Internet Network Information Center
- The China Business Review
- MeetWorldtrade.com
- Chinamarket.com—locate and source China manufacturers, suppliers and customers
- Asia-Links—links the world to Asia by providing high-tech content and services to all Asian countries, including China, and US
- ChinaOnline—the information network for China
