Menu

TOP 11 Golden Rules for Doing Business in China

ByChao Cheng|China Market Entry 101

Jun15

 

Every businessman is doing business in China, or planning to do,

because “it’s the right place to go”.

Before creating your China market entry strategy,

read these rules…

TOP 11 Golden Rules for Doing Business in China

Golden Rules For Doing Business In China

Rule 1. Nothing is Too Easy

Don’t be fooled by “It’s easy to make money in China.”

You need to overcome the barriers of languages, cultures, and communication.

Nothing is Easy, don’t be too optimistic.

 

Rule 2. Plan & Study Before You Start

Get a full picture before you really start. 

A smart way to do this is to hire a China Business Coach.

Understanding Market Trends in China will help you identify the your real business opportunities in China.

Things working in western countries often don’t work in China.

Study and research before you make any business decisions in China.

I compiled a series of Guides on Doing business in China and you can check them out.

Involving an Expert when necessary in your strategic planning phase will save you a lot of time and cost.

 

Rule 3. Start from a Profitable Niche

China is not a well balanced market.

95% of startups fail for choosing the wrong niche market in China.

  • Choose either a huge market where fierce competition exists.
  • or a niche market with little income potential.

Make the China Market Research BEFORE you get started!

  • What business ideas can work in China?
  • What cities should you start from?
  • Do you have unique selling points?
  • Are there similar products or services in the market?
  • Could you beat local competitors?
  • Could you keep your advantages, How?

Don not invest on businesses in which you do not have any advantages.

Not sure how to find a perfect and profitable niche?

Read this Ultimate Guide to finding your profitable Niche Market in China.

 

Rule 4. Localize & Adapt to the China Market

Many companies are struggling to adapt to the Chinese market.

But, this is the essential step to be successful.

Localize your products and services, localize your website, localize your team.

Keep an eye on your target customers, understand their our decision making process, and listen to what they are saying about the future, about the business, about the industry, about your competitors, about you,

Set up your local Chinese team, Build a Chinese Website that works, and Consolidate your Chinese online reputation.

Test and improve all the time.

 

Rule 5. Protect Yourself

Build Your Brand

A foreign company will have a higher level of trust if only you build up a brand.

Chinese businessmen can copy your ideas but a good branding is something they cannot copy, for now.

Don’t Rely on Contracts

Signing a contract is only the beginning of negotiations in China.

Be prepared for possible changes in the terms.

Use Multiple Partners

Before you find a truly reliable partner in China, keeping multiple partners for your daily business activities brings you a lot of benefits.

You can keep the overall costs down and test different approaches.

Control Your Company

When your business is going really well.

New competitors may be your Chinese partner, your sales director, other employees or your distributors.

You sourcing manager, purchasing manager pays much more than average and gets huge commissions from the suppliers.

We witnessed many stories like this.

So, take some actions before it happens.

 

Rule 6. Build Relationships

Business relationships are built formally after the Chinese get to know you.

Doing business in China is based heavily on personal relationships, which is called Guanxi.

If you are not a friend, you are basically not a trusted business partner.

Many western businessmen are easy to make mistakes since they don’t know Chinese business etiquettes.

Taking two bottle of French wine to the meeting in the office hour is a typical story to read.

Relationships with employees, suppliers, customers are crucial for survival in China. Chinese people are more sensitive to interpersonal relationships than Westerns are.

 

Rule 7. Move Quickly and Be Responsive

China’s economy is developing fast, and Chinese people are changing fast too.

Laws and regulations involving import duties, foreign company registrations, worker labor rates, and corporate tax structures tends to change every year.

Market conditions change even faster.

Decisions shall be made quickly in this market.

 

Rule 8. Be Patient

Move quickly, but do not rush.

Long-term commitment in China will help you win friends.

It takes time for

  • building the trust
  • a fully market adaptation
  • a good research, analysis and planning

Too many short-term speculators wanted to make a overnight fortune in China failed and earned a bad reputation.

 

Rule 9. “You Don’t Understand China” Means Disagreement

When you hear this:

“You Don’t Understand China”

You should understand this is when your Chinese people (maybe your Chinese partner, Chinese customers, distributors, employees, etc) express their disagreement.

Be patient and give the chance to listen to their opinions.

 

Rule 10. “YES” Sometimes Means NO

“Basically no problem” in Chinese (没问题 Mei Wenti) means BIG problem.

This might be the most annoying fact for most foreign businessmen trying to understand Chinese people.

Chinese people avoid saying a clear “NO”.

The answer “YES” is not necessarily and indication of agreement or confirmation.

Don’t be pushy to get a confirmation.

They need time to make decisions.

Try to figure out the reason behind the hesitance and try to find alternative solution.

 

Rule 11. Ask Questions & Listen to Experts

Doing business in China is daunting and full of challenges.

Many Western entrepreneurs rely on their guts decisions and later will realize it’s a wrong way to do so in the China market.

Respect the market and learn quickly from market experts.

As a China market entry strategy expert, I always started a discovery contract with my western clients to fully understand their true needs and answer all the questions in the preliminary pilot research.

For every important decision, I will go through a comprehensive analysis with data support, all the possibilities, together with a contingency plan.

Western business owners will experience challenges not only in the strategic planning, but also in the implementation of the action plans. The western executives appointed to be in charge of the China market are normally experienced international businessmen, but not the China expert in the beginning. A successful cooperation always relies on the understanding between the external experts and the client from top to bottom.

 

Any Questions?

Learning Rules for Doing business in China will help you stay away from common errors, and increase the chance of survival and success in China.

Please leave your comments if you have any question.

About the Author

Chao is recommended by Paypal to bring overseas brands into the China market. Now he coaches business owners to start up and grow their business in China. Author of Sell Online To China, How to Build A Right Website That Works In China, and a series of China Business Guides.

Leave a Comment:

Leave a Comment:

Starting a Business in China in a Smart Way!

Let's Start from a Discovery Contract, What is it?