Doing Business in China

Getting Started in China

Written by Bobby Jan for Gaebler Ventures

Doing business in China requires a lot of preparation. This article offers a few suggestions to get you started on doing business in China.

Many Western businesses are aggressively entering China's exciting, large, emerging market.

Getting Started in China

However, doing business in China is extremely competitive and difficult in most industries, especially for foreign companies without prior experience doing business in China. Stories of failures, even for large multinational companies with deep pockets, are everywhere. Fortunately, there are many cases of success and riches as well.

Study China

Even if you are an entrepreneur with lots of experience outside of China, your experience might not translate well in China. Many business professionals agree that doing business in China initiates with a steep learning curve.

- Understand the rules of regulations

- There are certain things expected of foreign businesses that might not be in the rulebook so make sure to understand the implied rules and regulations

- Since relationships and networks are so important for doing business in China, make sure you understand the business culture and how business is done in China

- Government plays a large role in any business in China so understand how government involvement may affect your business

- Get a feel of how the marketplace works

See China for Yourself

In China, rapid growth and rapid changes in the business environment go hand-in-hand. Don't take any expert's advice as gospel since ideas and frameworks can quickly become outdated. Nothing replaces firsthand experience of what China is like.

Here are some things to do when you are in China:

- Start networking and developing relationships

- Decide where in China you want to do business

- Decide if you want to run your Chinese business in China, a Chinese autonomous region such as Hong Kong, or from a distance outside of Greater China

- Determine if the employees you are looking for can be found in China

Doing Business the Chinese Way

The Chinese business culture is very different from what most foreign professionals are used to. Make sure you understand how to properly interact with your Chinese counterparts to minimize misunderstandings and conflicts.

The Chinese are also known to be very tough negotiators. Negotiation tactics may seem outrageous or unprofessional to foreigners. Keep in mind, however, the Chinese may feel the same way about you!

Other Things to Consider

How will you develop your management team? Most foreign companies have a few long-term home employees at the head of its China operations to instill the company's culture in the new operations. However, it is also important to bring in Chinese professionals to give you insights on the Chinese business environment and culture. Putting together your management team is really a balancing act.

Always remain flexible in China. Many Chinese business professionals complain--or even mock--western counterparts as being too rigid. China's business environment is extremely complex. To make things worse, this complex business environment is constantly changing.

Make sure your organization remains flexible enough to accommodate rapid changes and differences in culture.

Cheng Ming (Bobby) Jan is an Economics major at the University of Chicago who has a strong interest in entrepreneurship and investing.

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