China has been getting economically stronger for the past few decades and is a common business partner to many Western companies today. Entrepreneurs would like to do business with China, but what holds many of them back are the big cultural differences and failures. In order to enter the Chinese market, companies have been looking for people specialized in the Chinese language and culture for help. In this post, we are going to address the following questions:
- What has changed about China?
- What makes foreign entrepreneurs so eager to enter their market?
- Why do entrepreneurs have difficulties starting up in China?
The Entrepreneurial Spirit of China
Chinese premier, Li Keqiang, made mass entrepreneurship and innovation the leading agenda of their national economic strategy. China’s entrepreneurial spirit manifests itself in the desires of ordinary people and in the government, running much deeper than just in business.
Premier Li mentioned the word “entrepreneurship” 22 times and “innovation” 59 times, in his work report speech at the 2016 National People’s Congress, along the words “Internet of Things”, “big data”, and “sharing economy” which were also mentioned multiple times.
On the other hand, China was perceived in a different light by the mainstream western media during this period, portraying it as an economy that is predominantly state-owned and driven by monopolistic non-state large-scale enterprises. They called it “state capitalism” while, viewing China’s economy as something controlled by one-party leadership that fuels unfair competition.
All of these views carry negative connotations, but the fact is that western media ignored the other side of the Chinese economy almost completely. The state economy does still play an important role in the Chinese economy, but to ignore the rising group of entrepreneurs and the growing private sector would definitely be a mistake!
The Importance of Having Market Overview
Doing business in China is largely different than western business ways, so you can forget about the most of what you know about doing business in the west. The fundamentals, such as defining goals and objectives, conducting market research, defining your target audience, and developing an entry strategy are the same. What is different are the solutions to each of these steps, so strategies that were successful at home do not guarantee results.
When setting up your business strategy, you have to make smart choices regarding every single sector of your company, especially communications and project management. Conduct a project management tools comparison to find out which tool will help you get your projects done in the most efficient way. As far as communication is concerned, find the social media platforms that are the most ubiquitous and impactful in China. This is very necessary for keeping up with the fast pace. The culture, customers, market, legislations, and business ways in China are unique. Talk to everyone – to those that failed and to those that are managing to do their business here.
Building Trust
Business deals in China are done through relationships, and relationships take time to build, unlike in the west where they are done fast, with a formal business meeting. Trust is at the heart of business relationships, because there is no legal protection in China (regarding the set of laws that they can fall back on if everything else fails), so building trust is crucial. In order to achieve this, entrepreneurs have to do it in person instead of hiring local people to do this for them. Do not go so hard on developing a business partnership, but rather a personal friendship.
Pay Attention to Your Customers’ Feedback
Offer your solutions only after you have listened to their problems and needs. Their set of concerns and needs are different, just as the way they interact with companies. China is not behind the times, which is a misconception that Westerners often believe in. Consumerism in China is not in its infancy, but the opposite – they are right on track, especially when it comes to digital platforms and e-commerce. Customers will want to interact with you and talk about your business through social networks.
Digitalization
In China, there are over 700 million Internet users, which makes it a place with the most people connected to the digital world. Going digital there means more than just having a Facebook page and an attractive website. Consumers use the Internet for almost everything, so you need to immerse your business brand into the China’s digital world.
Train Your Team and Set up Processes
In order to reach maximum productivity, especially in the early-stage of your business, you need to train your staff. Invest in them and they will be more invested and engaged in your business in return. If you have western staff, you should add cultural training to complement the functional one. On the other hand, teach your Chinese staff about the ways in which western companies operate.
Also, make sure to set up processes to ensure the work to run smoothly. Chinese workers will often answer you with “yes” or “ok”, even though they don not understand, in order not to risk losing face. Thus, set a standard set of procedures, and they will feel more comfortable with the tasks they need to accomplish and their role in the company.
Understanding these differences between Western and Chinese culture, as well as ways of doing business, is crucial to your success. In many ways, China may seem like a dream opportunity for a creative and dedicated entrepreneur. However, many businesses fail due to trying to operate according to western rules and customs.
Oscar Waterworth