What do entrepreneurs and business professionals need to know about doing business in China, and what do women need to take into consideration? First: Chinese women usually work and play a very important part in professional and family life. Second: Personal relationships, in China called Guanxi, play a very important role in Chinese business life, more so than in the West. Expect to meet for dinner, for drinks, or even for Karaoke. Third: Chinese society values hard work, education and study. While it is a common practice to bring a translator to business negotiations, your Chinese partners will value it highly if you make an effort to learn their language to some extent. Fourth: While exporting from China is often relatively straightforward, selling in China (as in many other countries) means dealing with bureaucracy, permits and licenses. This can take months of time, especially for bigger or more exotic businesses. Having Chinese business partners can help.
About China and its economy
Most entrepreneurs and business professionals know that China is the world’s second largest economy and will eventually surpass the United States in size. Although growth has slowed a bit, at 5 to 8 percent per year China is still growing far faster than the Western economies. European and American car makers rely on China for much of their revenue since China’s vehicle market is now the worlds largest. Similarly, for luxury brands such as Gucci and LVMH, China is their biggest and most profitable market. In the second quarter of 2014 Apple sold USD 7.7 Billion worth of their various devices in China, roughly 20% of Apple’s global sales and 12% more than in the same period in 2013. Furthermore, although China is a huge market, it is also a huge factory. Many of the goods sold by businesses all over the world are made in China.
If you are looking to sell in China
In Chinese families it is often the wife who holds the purse strings and makes most spending decisions. It can hence be an advantage to be a woman when selling goods or services in China. Amber Deetlefs is the founder of the South African wine bar and restaurant Pinotage, in Beijing. She moved to China with her family and upon high school graduation started a wine import business, selling South African wine to expatriates. Soon after, as business expanded, Deetlefs got together with Chinese business partner Cao and opened Pinotage. In addition to serving expatriates, the restaurant has become popular also with locals, especially from the younger generation, as the Western habit of having dinner or lunch over a glass of wine takes hold also in China. Amber speaks Mandarin and is in her restaurant kitchen daily, teaching her staff South African cooking and making sure that her standards are met. She has a very close relationship to her staff who appreciates it that the boss is doing hands-on work. Auction Systems CEO Deb Weidenhammer opened a Shanghai office of her 18 year old US company in 2011.
She now spends roughly half her time in China and spends several hours per week learning Mandarin Chinese. In more difficult presentations a Chinese company employee will speak Chinese, while Deb mixes Chinese with English. Her advice to Western business women is to be very aware of the very different negotiation attitude in China. While Western culture often looks to create a win-win situation, the Chinese attitude is often one of win-lose and no one wants to be the loser. Negotiations can hence take much longer and it is often mandatory to walk out of the room at least three times before settling on a deal. Because of this, Guanxi, once again, helps to speed things up. Chinese views on contracts and obligations are typically less strict that in the West. Regular reminders and check ups help to keep your Chinese partners aware of expectations and obligations. Diplomacy, tact, but also determination are of utmost importance and in this aspect the Chinese business culture may, without necessarily generalizing, suit a woman from the West a tad more than a man.
Be very aware of the need of all negotiation parties to ‘keep face’, which means avoiding any embarrassment in front of a group and even, although to a lesser extent, in one on one meetings. Open criticism or the negating of a point the most senior member of the other side has just made is hence best avoided. If the other side has made incorrect assumptions that require attention, it is prudent to deal with this not so much directly in a formal setting but more indirectly, say over dinner. Finally, it is a good idea to do your research about the people you are dealing with. If your potential Chinese partners have spent extensive time overseas in the US or Europe for example, your best approach may be a mix of Eastern and Western strategies.
If you are looking to source from China
When sourcing from China, typically to sell the sourced goods in the West, the trick is to find suppliers who deliver the quality you need at as low a price as possible. Money talks! If you have money to spend, people with goods to sell will typically make an effort finding someone who speaks your language. This however is usually aimed at extracting a high price from you.
Cultural and language knowledge on top of Guanxi will help you to get sensible prices, quality and delivery times. The more of this you posses personally the better, however, hiring someone to help you can pay huge dividends. Jacob Rosenthal, an electronics developer from the United States was recently looking for a supplier of a communications chip. He contacted a number of companies in China and Taiwan, but ran into a wall. Seemingly straightforward questions were not answered for days and it was hard to get any information at all. Once he engaged a native Chinese person, Nancy Shen, to help with the sourcing task, things became much easier. Using her native cultural and language knowledge Nancy got accurate information about the capabilities of some of the companies Jacob had contacted before, and she also found an entirely new supplier. The difference this made was a factor ten in price.
In China, be aware that not everybody who claims to make things actually does. Many people you will talk to are agents. Ask hard questions; meet your potential business partner on the premises of the factory where you test them to see if they know the names of some of the more minor employees to figure out if you are dealing with an agent of with a factory representative. Alibaba.com is a great site on which to make contacts and source goods from China but the same precautions apply.
Dan Lubrich is the CEO of Chinese learning site Gurulu. Gurulu uses adaptive computer algorithms and artificial intelligence to teach its students Mandarin Chinese much faster than traditional teaching methods can. Dan has been doing business with China for more than 5 years and has extensive knowledge of its culture and business practices.