The growth of the China market is increasing as such a high speed that the number of foreign companies is flocking in each year. From 2001 till 2005, China has attracted 345.6 billion U.S. dollars in foreign investment more than the 323.3 billion dollars that poured in over the nine years from 1992 to 2000. China market s appeal to foreign investors are growing at such a rapid rate that China s economy is no longer just a production factory. Foreign companies are entering into China not only to produce their goods but also to selling their products to the local consumers. However, entering the China market needs a lot of tactics, networking, and familiarities.
1. Tactics
Many of the foreign investors who enter into the China market have a huge amount of experience in business administration and marketing strategies. However, the Chinese have a different way of doing business and most foreign companies do not have the correct tactics to deal with things in China.
2. Networking
Most people would agree that networking is very important for business dealings. With a strong network, we will be able to seek for help or consult someone if any problems were to occur. In China, networking or guan xi is one of the main methods which the Chinese use. Guan xi is the Chinese term that the locals use. The Chinese believe that everyone needs to establish good relationships with others. The only way to really survive in China is through guan xi .
Foreign investors may think that as long they have good business relationships with other organizations would lead them to be successful in China. However, this is only partially true. In China, any kind of relationships are important. Be it a personal or business or even governmental relationship, all of them are crucial in establishing a successful enterprise.
With good personal guan xi , the Chinese can rope in people whom they can trust into their business. The Chinese believe in having trust among their counterparts.
With good business guan xi , the Chinese would be able to negotiate easily and collaborate with others to ensure a lasting partnership with other parties. Having business guan xi would allow the local companies to meet more clients and suppliers to expand their business.
With good governmental guan xi , the Chinese would be able to settle their bureaucratic and administrative work faster as their contacts would be able to advise them on a personal level. Furthermore, any problems encountered with the paperwork, the Chinese would be able to seek help through their governmental relationships.
Thus, the Chinese value relationships very highly and even though their business with their contacts failed, the Chinese would continue to maintain a close relationship with them.
3. Familiarities
To enter into the Chinese market, one must have a good grasp of the Chinese culture. As different countries have their own unique way of values and working styles, lots of conflicts tend to arise due to differences. Thus, the foreign companies need to familiarize themselves with the Chinese culture and understand how the Chinese work.
For example, without a full understanding of how the Chinese handle with the authorities can bring a lot of problems to the enterprise. The way the Chinese communicate to the authorities differs from how the way it works in other countries such as the US and Europe.
Hence, one of the best ways to familiarize themselves with the Chinese culture is to engage a local individual or firm as the link between the foreign company and the China market. Local parties have the expertise to handle any problems and have a better idea on how to negotiate with the local firms.
About the Author:
Alina Hoon is a consultant of Starmass International. Starmass provides professional consulting services to assist foreign companies to enter the China market, from China market research, competitor study and China market analysis till export to China. Visit more business resources at: www.starmass.com
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