This is part 2 of a two-part series on doing business in China. Part 1 appeared yesterday.
When doing business in China, value talks!
China is currently experiencing a huge transition, with over one billion people shifting from rural areas to urban cities. If you look at the five-year plans of government organizations and national companies in China, you will find that they are trying their best to accommodate this transition. From this perspective, you can understand what is driving conversations and decision-making in China. If you can present a solution that they desperately need along this journey, China is a fabulous place to do business.
Respect their hierarchy
In China, you have to respect a person’s position in the company, starting from the moment you get their business card and see their title. In North America, it sometimes doesn’t matter if you drop a line to the CEO in the hopes of speeding up a business transaction, even if your main contact in the company is a mid-level manager. But be forewarned: if you do this in China, you probably won’t be too happy with the result!
For Chinese people, it demonstrates that 1) you don’t respect the levels of hierarchy; 2) if something goes wrong, you will just skip your representative in the company; and 3) you don’t understand that if you do this, the manager might lose face in the company and have difficulty continuing to represent you. In China, preventing someone from losing face is sometimes more important than winning an argument.
Respond quickly and be careful what you promise
In ClevrU’s experience, they found that if their Chinese partner asked for something, they had to answer quickly in order to work at the same speed as Chinese companies. Make sure you do your homework and give correct answers—they need to see that you are committed to moving things along. Also, be realistic on the deadlines you set. Once you set a deadline, you have to follow through. In China, a deadline is considered a promise.
About IP issues
Dana and I share the same opinion about intellectual property (IP) issues in China: although media tend to associate China with IP issues, you don’t have to worry about protection for your high-tech products in China any more than you do in other countries. Indeed, IP concerns are part of the nature of doing business—if you have something great that other people don’t have, they either want to buy it, partner with you or try to make it themselves.
If you work quickly and efficiently to develop your product or service faster than anyone else, and you create true value at a very good price, then you make it impossible for anyone else to replicate and reproduce what you are doing. Instead, others will try to figure out how to work with you. Now you’ve got a partner.
Resources available to get started
Canadian Trade Commissioner Service and the Canadian Embassy
The Canadian government is a tremendous resource that many people ignore. The trade commissioners and embassy staff are knowledgeable about strategic areas of interest to you. After all, their job is to help Canadian companies figure out how to win. If you get to know them and explain what you are hoping to do and where, they will be able to give you market advice and introduce you to someone who lives in your preferred area.
So, before you head out on your trip, spend some time talking with these organizations. They likely already know more about that local sector than you will learn over the next couple of years. And best of all, you will get terrific advice for free!
Dana always tries to stop by the local Canadian Embassy before he visits anyone in China—to say hello, let them know about his upcoming visit and update them on how things went last time. Dana was even lucky enough to get some people to go with him on his first few visits to China, as translators and coaches for business ethics.
This association was established to help Canadian companies do business in China and vice versa. For example, it offers space in China that you can rent—you can get office space or a mailing address. If you are looking for an inexpensive way to begin, this organization would be a good start. They can even help get a lawyer or an accountant when you need one, sometimes offering a set amount of consultation time for free.
Canadians have advantages
Living in a diverse society, Canadians understand different cultures and would likely have an easy time integrating into any culture or country in which they wish to do business. By nature, Canadians also tend to respect others—a Canadian’s typical attitude is: “I am not here to take over, I am here to help.” This very attitude would easily open the door to discussion, understanding and building business anywhere in the world with a positive outcome.
Dana summarized his experience in China: “The country we decided to move to is the largest and probably the most difficult, and we did this on purpose. It requires us to be focused, work hard and be smart. If you can do this and work out a formula that works in China, you would pretty much succeed anywhere in the world. So it is worth trying. Secondly, China is a mass market. If you can create a formula that works in China, you will be richly rewarded—we enjoyed working in China and all the people there. It is a wonderful experience. We’ve had tremendous success!”
Canadian startups, are you ready for China?