How to Manage a Successful Business in China

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  3. Business Mentality
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  5. A pocket guide to doing business in China

This is no reason to be discouraged from doing business in China, but it is definitely something to keep in mind. Women are not expected to participate in heavy drinking, so it might also be wise to incorporate a few women into your team when negotiating.

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You may have to fight for payment later. For guidance on this topic, check out this article from the China Law Blog. Above all else, always be respectful when doing business with the Chinese. Interrupting, no matter how urgent your comment, is considered very rude.

Pointing at people, acting cocky, getting angry in public, or even accepting food or drink without first refusing a few times are generally considered rude as well. Aside from politeness, patience is rewarded.

5 Tips for a Successful First Business Trip to China

The Chinese government censors the Internet heavily, controlling the type of information that can be accessed, as well as monitoring who is accessing what content, at what times. Limit the files you have on your travel laptop to the essential, and never send or receive sensitive documents online during your stay. If you must, only exchange this information over a secure network and websites. Also, make sure you encrypt your hard drive and use dual-password protection. If your device is stolen it will be extremely difficult to extract any usable information.

Many professionals also have trouble accessing websites like DropBox, Twitter, Facebook, and Gmail while doing business in China. Either type of VPN will slow your connection considerably. While doing business with a culture that is very different from the Western norm can be intimidating, that is certainly no reason to shy away from the many lucrative opportunities that exist in China.

Accounting Finances Financial Solutions Funding. Finance Human Resources Marketing Technology. E-tailing The online share of retail in China, at 8 percent in , is higher than it is in the United States and is not close to reaching saturation. Increasingly, this is conducted through mobile devices. The payments system is in place, logistics are improving, and online providers are trusted. Many retailers will adapt, often with far fewer physical locations.


Malls will have to become destinations for services beyond retail. Modernization of supply chains is a key enabler of increasing productivity in many sectors in China today. Until recently, most goods were carried by individual truck owner—operators. Alibaba alone is committed to spending billions of dollars on its own logistics. Third-party carriers such as SF Express are rapidly becoming regional leaders on the back of growth in China. Nearly two-thirds of registered kindergartens in China are privately owned.

Private universities are expanding. Traditional and online vocational learning schools are publicly listed multibillion-dollar businesses. Niche businesses, such as preparing children to apply to US, UK, and Australian high schools and universities, are also flourishing.

Business Mentality

The amount the Chinese are willing to spend on tutoring and support for their children is almost unlimited. As the middle class becomes wealthier, the increased ability to spend will drive market growth. More than 1, new private hospitals opened in China in , a number of which are percent foreign owned. The shortcomings of the mainstream public healthcare system in China are not likely to be overcome quickly. Patients are looking for solutions where both cost and quality are more certain, and private and foreign companies are being encouraged to deliver.

There is a related boom in supplying equipment to these new facilities. Available hotel rooms in China have tripled over the last decade.

6 tips for doing business in China |

Four million mainland Chinese visited South Korea in ; four million visited Thailand. The more than one million high-net-worth individuals in China remain generally unsophisticated as investors, seeking advice on how to broaden their investment portfolio both onshore and offshore.

Finding the chief information officer in a Chinese company is often hard, especially in a state-owned enterprise. Historically regarded as simply a support role for the business, CIOs were pushed three to four levels down in the organization and attracted little talent which instead went to Internet start-ups. A typical Chinese company spends only 2 percent of revenue on IT versus international benchmarks of around 4 percent. As these companies struggle to bring technology into the core of their operations, they need massive amounts of help to do so.

The cost of good IT talent is already soaring. Most Chinese companies will be unable to solve their technology challenges for themselves. China already produces 60 percent of solar panels and wind turbines. Increasingly, it is consuming this output domestically. For example, 11 gigawatts was installed in large-scale solar farms in , and this will grow an additional 30 percent in China is also investing heavily to exploit its shale-gas assets and develop cleaner coal technologies. China does not feed itself today—certainly not with the kind of quality and value-added products that the middle class seeks—but it will be challenged to do so in the future.

Continual food-safety crises illustrate the challenge. For many successful technology investors, such as Legend Holdings, agriculture is the new Internet. Chinese companies are investing in agriculture outside of China at scale, from Chile to the Ukraine, for China. They also invest in China, especially in value-added products—such as fruit and the production of frozen ready meals.

Often in China, the fundamental barrier to success is less about identifying the opportunity and more about the inability to execute the plan more effectively than others. Joint ventures have been part of doing business in China for more than 30 years. In many sectors, they remain the only way to participate, often in a mandatory minority position.

A pocket guide to doing business in China

But there are a number of clear lessons:. Many potential joint-venture partners are highly successful and very large within China, who sees international partners as little more than a temporary accelerator of growth.

Place a trusted senior colleague in China with a commitment to have him or her be there for the long term. He or she is your go-to person when things get volatile in China, someone whose viewpoint the global management team will trust, and someone the head of your joint-venture partner will also learn to trust. Usually, this person will be very strong in people development, with skills almost overlapping with a head of HR.

And he or she will need to be percent trusted to enforce compliance and to role model required behaviors. Typically, make this person chairman of your Asia or China operations, as senior a title as possible.

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Talent acquisition and development, at all levels, remains highly time consuming and often frustrating for multinationals. Turnover will likely be high and should be planned for. If protecting intellectual property IP in China is a concern, consider it very hard if that IP needs to actually come to China. Some companies in the technology sector have been very successful, even while not bringing core IP into China. Secondly, consider if the cost of loss of IP could be contained solely in China.

Again, in technology, multinationals have aggressively and successfully sued Chinese companies outside China that have taken IP from multinationals in China and used it outside China. China is evolving fast on IP protection, with more and more Chinese companies suing other Chinese companies.

Trends shaping growth and creating new opportunities in China

It is becoming increasingly likely that a Chinese partner will recognize the value of IP and be willing to protect IP developed jointly with them. A practical means of making it harder for global IP to leak into China is to establish a stand-alone IT architecture for China that has no access to servers at headquarters. China is likely to be a more volatile economy. Indeed, downturns in China have proved to be attractive moments to double down.

When partners or governments are under stress, new partnerships and licenses can become available to foreign partners that are willing to step up and invest. Even after 30 years, few multinationals adopt this mind-set. There may be opportunities to make money in the short and medium term, but shortcuts will eventually be made transparent.