Many Australian businesses are looking at China, now our largest trading partner, as a strategic priority.
But there are many differences in the business cultures that create potential pitfalls for Australians trying to establish a Chinese operation. Earlier this week, Michael Woodhead wrote Six Things Nobody Tells You About Doing Business In China.
Today we follow up with tips on handling business relationships with Chinese, with input from three experts. Here we go:
1. Cold Calling Will Freeze You Out
Making friends in China is essential to forming business relationships, and cold calling people to talk business won’t win you any friends in China.
You have to have a “connection” or “guanxi” to introduce you to the people who you might want to work with, said Alexander Bowe who studied in Beijing and worked with the US and Foreign Commercial Service.
“Cold approaches don’t work in China,” he said. “I met someone who was trying to get into China to sell chicken feet and other snacks, but he didn’t know anyone.
“He thought he could break in with cold introductions, but he kind of got a reputation as culturally insensitive and no one over there would talk to him.
“He would just call people up and ask if they wanted to buy from him and was rejected every time. It’s just not how things are done over there; someone has to vouch for you or no one will listen to a word you say.”
Clea Wiebenga, director of the Asia Pacific desk at ANZ, said if you don’t know anyone go to organisations like ANZ, Austrade, and the China-Australia Chamber of Commerce to draw on their networks and build your own.
“Be wary of meeting one person who promises the world, but can disappear very quickly,” she said.
2. Friends First, Work Second
In China, you need to become friends before you can talk business, said Carl Jetter, of Australia China Connections. http://www.chinaconnections.com.au/
The more valuable the business, the more important it is to build up the relationship.
“Before you start talking about business you really get to know each other and talk about everything but what you really want to talk about,” he said.
Ms Weibenga agreed.
“There’s no such thing as a quick win in China,” she said.
“People need to pound the pavement. I think sometimes people can be daunted because they hear so much about building relationships, but nothing beats just getting on the plane, getting over there and talking to as many people as possible.
“You can’t expect to go over on the first visit and form a deal or form a solid relationship. Things take time.”
3. Beware Of Copycats
If you want to manufacture something in China, keep the unique features and technology to yourself, Mr Jetter said. “People in China will copy anything they can,” he said.
Mr Bowe agreed. “Chinese companies will constantly try to reverse-engineer products and then make them on their own once they figure out how to. It’s not really regarded as unethical,” he said.
4. Know Where Every Penny Is, All The Time
If you can’t be in China then make sure there is someone there who you can trust.
Chinese middle managers on the ground have been known to funnel profits into a shell company and force you to sell your company to them for pittance when you go broke, Mr Bowe said.
And he had heard of “a lot of cases” of this.
If you don’t know anyone, go to a sourcing agent who will find someone credible to manage your business on the ground and oversee quality control, Mr Jetter said.
“It’s not that you don’t trust the Chinese, it’s a matter of understanding and tolerating the way it is. They will just cheat if they can to get an advantage. You have to check and triple check everything.”
Ms Wiebenga agreed. “It pays to double check the finer details,” she said. “Particularly with manufacturing; leave nothing to chance.”
5. Just Turn Up
While cold calling is not welcome, once you’re in, you’re in. A business contact in China is a friend, and like a friend, they will open the door to you when you turn up on the doorstep uninvited.
“To make an appointment is not Chinese, but if you turn up, they will see you,” Mr Jetter said.
“You build a relationship and they will call you a friend and that means they are willing to listen to you and potentially do business. “
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