DOING BUSINESS IN CHINA
With a land mass that is roughly the size of the United States, China’s population is equivalent to the combined populations of North America, South America, Western Europe, Norway, Sweden, Australia and New Zealand. China is also a highly diverse country with substantial regional differences resulting in multiple markets within the country rather than a single monolithic one.
Due to China’s cultural differences and massive economic opportunities, the country is often perceived as a “Wonderland”. However, due to the complicated regulatory environment and hyper-competitive business environment, China is more akin to a minefield, with one misstep resulting in the possibility of failure. Therefore, it paramount that potential entrants partner with reputable companies that can be trusted.
As the number of foreign enterprises investing in China and doing business with Chinese partners has increased so has the number of commercial disputes. It is therefore paramount that potential China entrants should partner with reputable companies with first-hand experience and understanding of China.
The team at Sovereign China is on hand to support and advise foreign businesses that are considering entering the Chinese market. With offices in Shanghai and Beijing, we have successfully assisted more than 700 companies from over 50 countries with their China market entry and operational activities.
A few tips and considerations for doing business in China are:
- Senior management must be committed: more commitment is required than just money
- Be mindful of corporate rigidities: past successes in other markets does not mean you will succeed in China. Adapt to the specific market conditions.
- Don’t check your brains in at the border: don’t do something just because somebody told you “that’s how it’s done in China”. If something doesn’t make sense, don’t do it.
- “Guanxi” (i.e., relationships) retire or go to jail: you should instead rely on sound business models and proper procedures.
- Know what you don’t know: don’t be afraid to admit it. You can rely on trusted partners to fill any knowledge gaps that exist