Published on November 26th, 2010 |
by Tod Whipple
Commerce in China
Commerce in China particularly for American Entrepreneurs can be summed up as “patient perseverance”. I have spent the last two years conducting business in East Asia
and China for real estate funding through the EB5-Visa
program and wanted to share a few tricks of the trade that hopefully add value to your venture in China. Most importantly understand why you are doing business in China and the purpose. If it is strictly to get a piece of the swelling population and year over year double digit economic growth that may not be a good enough reason. Many other opportunities in international business await like Brazil and Mexico.
Commerce in China checklist for American Entrepreneurs:
When preparing to to do commerce in China do not have illusions of a quick windfall of fortune from the billion plus population. Your efforts will require multiple international trips, dealing with an unhealthy environment in terms of pollution and dealing with a drastically different business culture. If you set your mind to a “long haul” mentality you will be pleasantly surprised rather than disappointed at your progress.
Your business venture success rate in china is completely dependent on your contacts and connection to the China marketplace. Finding a qualified and deeply connected partner (whether joint venture, fee based or equity) is a key ingredient to your success. Be wary of pay as you go or upfront fees from your foreign partners, it is often better to ensure they have some skin in the game if you succeed or fail. Pay for performance fees are fine even if you have to give a little extra.
3. Understand the Culture
Commerce in China is more relationship based and more cautious than American commerce. Establishing relationships first and business second is the appropriate stance. Showing your presence multiple times in China to your customers and vendors indicates your perseverance and commitment to your product or service as well. Be sure to bone up on basic etiquette as it relates to eating and greeting as well. Some things you will just have to pick up from experience like when a Chinese financial advisor starting smoking and reading his cell phone in a closed room meeting I took in Shenzhen. It may seem offensive to us, but it is how some just do business (admitted this is a rare occurrence).
You will likely be doing business in most of mainland China cities like Shanghai, Beijing and Guangzhou just because of the large market size. Shanghai alone, has 22 million people in it, the size of two New York cities growing at 8 – 10% annually. The cities are not cheap and will cost only a little less than conducting business in major cities in the Untied States. Planning for multiple international trips does not come cheap especially if you’re planning on flying business or first class. If you are traveling within China be very patient at the airports, city to city flights are about 50% on time and can delay you 4 -5 hours from original departure date, so plan accordingly.
5. Gained in Translation
Learn the language or hire an astute translator. If you are completely linguistically challenged like myself than a translator is a must. Two important lessons I learned while promoting my various real estate projects. First, try to get a dedicated translator that travels with you. My schedule was very intense, traveled to six cities in 10 days, which forced me to pick up 3 different translators. The extra effort for new translator orientation to my mannerisms and presentation material was a challenge. Second, find a translator that understands your material completely. One of my meetings was an absolute disaster because we started discussing financial proformas for commercial real estate and the jargon was more than my translator could bear.
Commerce in China is not easy and competition is becoming challenging, but hopefully you found a least one item useful in the checklist above. Best of luck and safe travels.