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I have just spent two weeks in China, (Shanghai / Beijing) on a Business in China study program. This involved studying at the University of Shanghai for Science & Technology as part of my MBA program. We worked with their MBA students and engaged with both local Chinese / multinational organisations, political leaders (deputy mayor of Shanghai) and basically understanding how the Chinese do business.
The rate of change in China is so rapid and I think it is beyond the understanding of anybody who has not seen it for his or her own eyes.
My key points of doing business in China based on my own research includes the following:
1. Do your homework as Ian mentioned above - Austrade will do this for you (at a cost)but with there large presence in china and there contacts this this will prove particulary usefull. Going alone is the long / expensive way of doing things.....
2. The Word Gunanxi is probably the most important single asset for doing business in China. It is all about building personal relationships and without these doing business in China is extremely difficult if not impossible. Austrade can help with this by introducing you to the right contacts etc..These relationships you build go beyond simply just doing business and the majority of business decisions will probably be made outside the office.
3. Zhongjian ren The intermediary. As a foreigner going into China it is recommended that you have a key local person that you can trust and be your middle man. This is not just because they speak the local tongue but because they have local knowledge/contacts and will gain greater respect and reputability then any foreigner when doing business in China.
4. Mode of Entry - Two main modes of entry are WOFE - wholly owned foreign enterprise / JV - Joint venture. Both have advantages / disadvantages and it is very important you understand these. Refer http://www.cbbc.org/ a very good website from the China-Britain Business Council (I am Australian but live in London)
5. Labour / Market conditions - Skilled labour is not freely available like everyone thinks because of the large population and this is pushing up labour costs ( 900m of the 1.3 billion are rural people) - the same goes for potential customers with earning potential it is probably 250m. Saying that there is a big drive for educating rural people & attracting business in the rural areas as part of the goverments 11th 5th year plan, but this will take some time.
6. Legal - Make sure you have local legal assistance as the laws in china are changing all the time and the laws can operate differently in different provinces.
.Austrade can put you in touch with these contacts
7.Don\'t believe everything your read in the news about China. The majority of it is past its used by date because of the constant change. Part of my MBA studies involved a major assignment and most of this research came from what i observed/heard whilst over there not what i read in research journals, media etc...
8. In for the long haul - There are alot of western business\'s that i observed doing well and others who are just breaking even. China\'s growth is phenominal but it should be approached with caution - Approach the market as if you were doing business in any other part of the world. ie. as Ian mentioned above do your homework!
I hope this info helps anyone looking to set up business in China as it really is an amazing country which I personally think is a very attractive place to do business
The rate of change in China is so rapid and I think it is beyond the understanding of anybody who has not seen it for his or her own eyes.
My key points of doing business in China based on my own research includes the following:
1. Do your homework as Ian mentioned above - Austrade will do this for you (at a cost)but with there large presence in china and there contacts this this will prove particulary usefull. Going alone is the long / expensive way of doing things.....
2. The Word Gunanxi is probably the most important single asset for doing business in China. It is all about building personal relationships and without these doing business in China is extremely difficult if not impossible. Austrade can help with this by introducing you to the right contacts etc..These relationships you build go beyond simply just doing business and the majority of business decisions will probably be made outside the office.
3. Zhongjian ren The intermediary. As a foreigner going into China it is recommended that you have a key local person that you can trust and be your middle man. This is not just because they speak the local tongue but because they have local knowledge/contacts and will gain greater respect and reputability then any foreigner when doing business in China.
4. Mode of Entry - Two main modes of entry are WOFE - wholly owned foreign enterprise / JV - Joint venture. Both have advantages / disadvantages and it is very important you understand these. Refer http://www.cbbc.org/ a very good website from the China-Britain Business Council (I am Australian but live in London)
5. Labour / Market conditions - Skilled labour is not freely available like everyone thinks because of the large population and this is pushing up labour costs ( 900m of the 1.3 billion are rural people) - the same goes for potential customers with earning potential it is probably 250m. Saying that there is a big drive for educating rural people & attracting business in the rural areas as part of the goverments 11th 5th year plan, but this will take some time.
6. Legal - Make sure you have local legal assistance as the laws in china are changing all the time and the laws can operate differently in different provinces.
.Austrade can put you in touch with these contacts
7.Don\'t believe everything your read in the news about China. The majority of it is past its used by date because of the constant change. Part of my MBA studies involved a major assignment and most of this research came from what i observed/heard whilst over there not what i read in research journals, media etc...
8. In for the long haul - There are alot of western business\'s that i observed doing well and others who are just breaking even. China\'s growth is phenominal but it should be approached with caution - Approach the market as if you were doing business in any other part of the world. ie. as Ian mentioned above do your homework!
I hope this info helps anyone looking to set up business in China as it really is an amazing country which I personally think is a very attractive place to do business
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