China may seem like a dream opportunity for an entrepreneur, and in many ways it is. But things work differently in China and many new businesses don’t quite hit the mark.
For some, the language barrier seems unsurmountable, while for others the amount of red tape and ‘Chinese’ ways of doing business is too much.
Before setting up in China, I spent a lot of time here, studying the people, the culture, and the language. I also took a good look at how people were doing business – in both for local and foreign companies.
And while I don’t claim to have all the answers, I do have some tips for entrepreneurs looking to start a business in China.
Have an overview of the market:
Take everything you know about business in the west and throw it out the window.
Ok, not all of it but doing business in China is a whole other kettle of fish.
The fundamentals of setting up your business don’t really change- you need to define your objectives, find your target customers, research the market, develop an entry strategy and launch. Business 101 right?
Right! But the solution to each of these steps is very different in China and successful strategies at home do not necessarily guarantee results here. The market is unique, the customers are unique, the culture is unique, the legislations are unique, and most importantly the way business is done is unique.
Do your research. Talk to others doing business in China. If possible, talk to those that have failed. Knowing what not to do is just as valuable!
It’s all about trust:
Doing business in China takes time. In the west, deals are often done quickly with a formal business meeting. In China, they are done through relationships, and taking the time to build a relationship with potential clients is crucial.
At the heart of these relationships is trust. We tend to give people the benefit of doubt when we meet people, knowing that if all else fails we have a set of laws to fall back on. The Chinese do not have this legal protection and have had to develop other methods of building trust.
This can become a major challenge for foreign companies starting in China – how to develop a sense of trust? Many companies hire local staff to do this for them but nothing is as good as the being there in person.
My advice is to develop a personal friendship deeper than a business partnership. It should be more than just guanxi.
BUT… don’t get too caught up with the wining, dining and gift giving. Don’t forget, at the end of the day, you are here to do business and you need to offer viable business propositions to your clients.
Invest in digital:
Nowhere else on the planet are people more connected to the digital world than in China. With over 700 million internet users in China, going digital means more than just having an attractive website and Facebook page.
In China, you need to immerse your brand into the digital realm as consumers use the internet for almost everything. From chat services to forums. From ordering dinner to booking holidays. From virtually tying on new lipstick colours to virtual front row seats at a fashion launch. Everything happens online.
The digital options for businesses are endless and too vast to discuss here. But check out my blog where there are countless articles on the digital tools available and how best to use them.
Listen to your customers:
Listen to their problems, listen to their needs, and then, only then, offer your solutions.
It sounds obvious, but in China you will hear some things you have never heard before. The Chinese have a different set of concerns. Their needs are different and most noticeably, the way in which they want to interact with your company is vastly different to customers in the west.
Many come to China with the preconception that China is behind the times and the consumerism is still in its infancy. In fact, the opposite is true, particularly when it comes to e-commerce and digital platforms.
Chinese consumers want to interact with you. And they will talk about you and your competitors through social networks. By listening to these conversations you will be able to meet many of their demands, develop your e-reputation, and stay ahead of the game.
Don’t sweat the small stuff – outsource:
Successful entrepreneurs know that they need to work on their business rather than in their business.
You start a company because you are good at what your company does. You may hire some employees who play an essential part in the core operations of the organisation but there are likely to still be some knowledge gaps. HR, payroll, customer service
Sure, you could learn to do some the administration tasks yourself but it is likely to take you twice as long and take you away from building the business.
You could hire more staff. But as a startup you probably don’t have the cashflow for more employees, particularly when some of these roles are required part time or only relevant for a phase of development.
The solution? Outsource where possible.
Defining the objective can assist in determining where you can out source. Is the task directly related to achieving your objective or just a side effect of doing business? If it is the later, then outsourcing could be the right option.
Train your team:
People are a company’s best asset. It is an often used cliché but I believe it still stands true.
You will never need good staff as much as you do during the start-up period. Well trained staff are more productive and are more likely to want to learn more in order to do better. Retention rates are also higher for employees who have had training and feel like the company is invested in them. In return they are more engaged and invested in your business. Exactly what you want when trying to get your business off the ground.
For western staff, cultural training should complement functional training. A little bit of language and culture will go a long way.
For Chinese staff, provide some guidelines on how western companies operate and the expectations for the workplace.
Whether you hire local workers or bring a team of expats, developing your team to be versatile will increase your chances of success.
Set up processes, Chinese workers love processes:
If you are doing business in China, chances are you will hire Chinese staff. It makes sense right?
So how do you get the best from your local employees.
Never trust a simple “ok” or “yes” answer from a Chinese staff member. Even if Chinese do not understand they will rarely say so or ask questions and risk losing face. Instead they will either do what they think or go and ask a Chinese colleague. This can be a massive time waster and result in errors.
If you have a standard set of procedures in place, Chinese workers are more likely to feel comfortable with their role and the tasks they need to undertake.
And in my experience, they will also have more confidence that you actually know what you are doing.
So by now, you should understand that everything in China is different. Understanding these nuances can mean the difference between success and failure.
What is your top tip for entrepreneurs looking to set up in China?
About the author:
Olivier Verot, who describes himself as “A French man lost in China for several years,” speaks Chinese, reads Chinese, and uses Chinese social media almost every day. Passionate about digital marketing, in 2012 he realized his dream to open an agency in China and live his passion. Olivier likes to share his knowledge with others through his blog, and is always open to meeting new and interesting people in Shanghai.