Seven tips for doing business in China

Do your homework. Lots of homework.

Jon Geldart is the executive director for markets development at Grant Thornton and the author of two books on China; The Thoughts of Chairman Now and Notes from a Beijing Coffee Shop and will be appearing at IoD Open House. Geldart says, “The challenges of working in China are threefold. Businesses need to understand the history, language, and culture. If a business wants to work with the Chinese, in or outside China, the important thing is to do the research.” He adds, “China is fundamentally the opposite of what you’ve experienced anywhere else.”

It’s good to talk

China is effectively made up of different markets rather than one giant market. You would be well advised to seek advice from people on the ground.  The Department for International Trade, which is based in Beijing, can provide advice and assistance to get you a foothold in the country and help with introductions. The DIT also puts on roadshows for UK exporters to help them reach the right market or region for their product.

Protect your property

Karen Winton spent 25 years working in the Far East and is a managing partner at Nest, a venture capital firm which helps UK start-ups looking to expand into Asia. She says, “You have to think carefully about how you protect your Intellectual Property (IP). China has a reputation for an IP regime that is not as watertight as it could be. Due diligence is terribly important even with people that you trust and that you’re building relationships with. We encourage people to think about Hong Kong because it has things like common laws to ensure your IP and your patents are protected. Having that legal basis to fall back on is a lot more important than some people may think.  It is also a lot cheaper to operate out of Hong Kong. The corporate tax rate is lower than China.”

Put a Good Face On

It is essential that you understand the concept of ‘face’. If you are in a meeting and somebody outranks or is older than you then it is essential that you show that person respect or ‘face’. You also have to spend time building trust and you may also have to do a lot of dining out as business is often done over dinner.

The Competition is Fierce

Simon MacKinnon OBE has spent the past 30 years living and working in Shanghai. His advice for anyone thinking of setting up business in China is “to be ready to work harder than they have ever worked before – to be resilient, to be humble and to have a sense of humour. China is the most competitive market in the world, bar none. You will be stretched and you will grow as a leader and as a business person far more than you expect. As part of this, if you make the effort to learn at least a little of the local language, you will be well rewarded.” 

Retail Means e-tail

China is the world’s largest ecommerce retail market and around 90% of all retailing happens online. You can sell products and services to China over the internet if you have a Chinese website. This must be hosted within the Chinese government firewall and work on Chinese search engines. Alternatively, you could trade through a Chinese e-marketplace like Tmall or Taobao. The DIT can assist in finding the e-marketplace that is going to be best suited to your product.

Speak to the IoD

The IoD City China Group was established in 2006 to promote greater understanding and interaction with China with a view to enhancing business and other relationships between the UK and China.

The China Interest Group is a focal point for IoD members both in the City and beyond as well for others with a strong interest in China.

Membership is aimed at those who are interested in doing business in China as well as those doing business with Chinese investors in the UK.

For more information call IoD City of London on 079 0315 3793