Essential Advice for Doing Business in China
2007-10-16
By the U.S. Commercial Service, Beijingand Rosemary Gallant U.S. Commercial Service
A key list of "do's and don'ts" of doing business in China draws from the experience of American companies with successful sales in China, as well as information from the U.S. Department of Commerce.
Diverse Markets Require Careful Research
China is a very diverse market with varying levels of development and regional industrial strengths. From Harbin in China's Northeast, to subtropical Haikou on Hainan Island in the South China Sea, China encompasses diverse topographies, climates, cultures, and peoples. Each region therefore has its own consumer preferences and business needs. Some industries are spread all over the country, some are clustered, and others are heavily concentrated in one area. For example, of the roughly 3,000 personal care products factories in China, 2,700 are located in the southern province of Guangdong.
Basic market research is available from the U.S. Department of Commerce through http://www.export.gov, as well as a host of private consulting firms, research companies, and trade groups. The commercial sections of the U.S. embassy and consulates in China, in conjunction with the Export Assistance Center of Western PA, can also work with American exporters to provide research on specific topics to understand current market conditions, pricing, and future trends. Lists of local businesses service providers, consultants, and law firms are available through the commercial sections of the U.S. embassy and consulates. The U.S. Department of Commerce maintains offices in Beijing, Chengdu, Guangzhou, Shanghai, Shenyang, and Hong Kong. Similarly, many companies need multiple representatives to cover China.
Speak the Same Language
Despite China's commitment to, and success in, developing human resources with good English-language skills, companies that are serious about doing business in China should supply company information in Chinese and be prepared to initiate contact in Chinese. Having Chinese-language material prepared and a Chinese speaker or interpreter available makes a great first impression and demonstrates that a company is serious about doing business in China.
Small firms also need to be resourceful about finding affordable Chinese-language expertise. For initial oral communication, a number of companies have used Chinese-speaking employees from other parts of the company to help with sales and marketing to China. One business has an individual responsible for placing sales calls to China stay late at the office to introduce the company during business hours in China. Another transferred a Chinese-American from the factory floor to the marketing department to handle Chinese customer accounts. Interestingly, once contact was made in Chinese, several companies indicated that they then conducted routine business in English via e-mail without a problem. Similarly, successful companies normally invest in developing Chinese-language material about their companies and products. Companies worked with their distributors on the translations, used outside professional firms, or used their U.S. staff to produce business cards, brochures, and other materials. The Commercial Service can help companies find translators.
Find the Right Partner
Small firms typically need to find a counterpart in China to make sales and deliver products for them.
Guidebooks on doing business in China emphasize the importance of personal connections, or guanxi (GWAN-shee). Networking is an aspect of doing business around the world, but it takes on added importance in a society with a complex bureaucracy and a weak legal system. A web of guanxi helps firms navigate China's bureaucractic and distribution challenges.
The importance of relationships is another reason why many small American companies choose to sell through trading companies or local distributors, even if they have offices in China. Representative offices, the most basic, least-expensive type of foreign commercial presence in China, may only perform "liaison" activities; Chinese law does not allow such offices to sign sales contracts or bill customers directly. As a result, local agents and representatives are crucial.
