Opinion: How to succeed in business in China

Succeeding in China requires having an eye on the long term, says China expert David Thomas. Here are some of his tips for doing business successfully there.

China expert David Thomas Source: Business Advantage International

During President Nixon’s visit to Beijing in 1972, the Chinese premier, Zhou Enlai, was famously asked for his view on the impact of the French Revolution. Zhou remarked that it was ‘too early to say’.

His comment underlined the differences between China and the Western world when it comes to measuring reasonable timeframes.

To realise business ambitions in China, executives should expect it to take more than a year and entail many trips to China to meet with Chinese partners, suppliers, or clients.

Unfortunately, some businesses and entrepreneurs, hampered by the demands of quarterly reporting, short term cash flow, budgetary constraints and the natural scepticism of trusted advisers, boards and even spouses, find it difficult to commit the necessary time, resources and capital.

Time horizons simply tend to be too short. After the initial euphoria dies away, many become disheartened as they face a plethora of unique and unfathomable challenges: cross-cultural nuances, language differences and the confusing and seemingly haphazard thought patterns of their Chinese counterparts.

In my experience, they usually give up too early, or run out of money, time and patience.

Story continues after advertisment...

Pointers

Here are some pointers drawn from my own experience:

  • Focus at all times on the relationship not the transaction. At a recent dinner in Guangzhou all of the time was spent talking about food, kids, golf, wine and the weather. It was only as we walked out of the lift that there was any discussion about the deal, and most of this took place as our potential partners were waiting for their car to arrive outside the restaurant. It can be infuriating, but that’s often what it takes while your counterparts work out whether they like and trust you!
  • A good rule of thumb is to double your budget and halve your expectations. It’s going to take longer than you think and cost more than you expect. Allow two years, and four to five visits per year, to achieve the outcomes you’re looking for. Turn up regularly, with gifts (red wine is good). Show your smiling face often, be ready to attend lunches and dinners rather than meetings, and dig in for the long term. You’ll be surprised how it starts to come together eventually once the trust has been built.
  • It is important to develop local partnerships in China with people who already have trusted relationships and networks for you to tap into. Rely on them to guide and advise you and always take their advice (no matter how crazy it seems sometimes!). They understand the local culture and you don’t.

‘The Chinese do not read their emails, particularly if written in English.’

  • It helps to reward your local partners generously for their efforts. You’re better off owning 10 per cent of something that has value, rather than 100 per cent of something that is worth nothing! Don’t be greedy, think long term!
  • It is efficient to focus on one or two relationships only, rather than spreading yourself thinly across different people, organisations, regions and cities. You will be lucky if you are ever able to achieve one trusted and binding relationship in China, let alone more than one.
  • The Chinese do not read their emails, particularly if written in English. Use WeChat to communicate, not email.
  • Mixing with the locals is important. Do not get side-tracked by the local expatriate scene, which is fun, exciting, enticing and certainly feels more familiar and comfortable. Business in China is driven by the locals and foreigners are tolerated if you have something that they need or want. It’s all about what they need, rather than what you need!
  • Persistence is critical. Never give up! There are many examples of foreign organisations withdrawing from China at just the time that the outcome was within their grasp.
  • If you do have to pull out or withdraw for understandable commercial reasons, then try hard to preserve and cement your existing relationships for the longer term. You never know when you’ll need them again and, in any case, news spreads fast in China, which will make it much harder next time around.

As Confucius said, ‘It does not matter how slowly you go as long as you do not stop.’

David Thomas is director of consultancy Think Global, which focuses on helping companies do business in China and other BRIC economies. He will be a keynote speaker at the Papua New Guinea Investment Conference in Sydney on 7 & 8 September this year.

Speak Your Mind

*