Breaking into the Chinese market depends solely on having the right strategy in place. As China is the most populated country in the world, there is an array of prospects for savvy business owners with the zeal to expand their operations internationally. You may encounter some challenges if you don’t know your way around doing your business in China. Even though the country has become receptive to different types of investments, not all foreign investments are currently permitted.
Working in the supply chain industry in China can be exciting and highly profitable if things are done properly. Below are tips to help you out if you are considering expanding your business in this country.
Identifying the Possibility of JIT
JIT basically stands for just-in-time, but it takes a different meaning in China. Due to the fast-growing economy of the country, new roads and cities are under construction all around major cities to meet up with the world’s development standard, and so it is likely that companies who transport their goods via huge trucks may be delayed in traffic for hours, or days, as the case may be. Also, GPS capabilities are not yet strong in China as in the Western world. It is therefore important that you put the possibility of huge delay into consideration if your business would require using the road often. If you can employ other less time-consuming methods of transportation, fine. The rail, for instance, is a close substitute, but whatever good you may be transporting must meet the requirement of using such a method. However, cell services in China are very strong. This is probably a significant compensation.
Understanding the Culture
The Chinese culture and work are blended. Unlike in the U.S., the Chinese mix business with personal life; they don’t want to just do business with you and move on, they want to know some details about the people they are dealing with. That is why it sometimes takes longer for a foreign businessman to find his feet in China because of the getting-to-know-you phase. The refusal to respect this cultural difference can be considered as being insulting, and this might lead to business loss.
Research on the Chinese Law
Of all the laws in China, the Anti-Monopoly Law should be greatly understood by companies seeking to set up shop in the country. For example, a company that intends to set a ‘concentration’ that goes beyond certain thresholds is required to seek clearance from the Chinese government concerning the coming transaction. This process alone can take about 180 days. Also, before any foreign company can be allowed to make investments that may have an impact on national security, the Chinese law demands that such company must gain approval from the government. The most important thing for every foreign business is to gain approval from the government; things are most likely to run smoothly after that.
Partner Up
It would be of great benefit to foreign companies that are still relatively inexperienced about business dealings in China to forge a partnership with companies already operating in the country. This is a great way for the new companies to take advantage of the old companies’ pre-existing knowledge of the requirements of working in that environment. However, it is advisable for foreign companies to seek local partners with vast knowledge of how businesses are run in the communities. Having Chinese partners will help solve many problems that may be strange to foreign investors and ultimately increase the chances of success. In other words, you can hire locals to put you through the techniques and methods of running a business in the area. Numerous bright young Chinese men and women are willing to work for foreign companies because good jobs in China these days are akin to searching for the Holy Grail due to the overpopulation. This way, you are contributing to the growth of the nation.
Don’t Rush Your Investment
Even though China has the second largest economy in the world, the country is still considered to be underdeveloped and may pose a potential risk to businesses. It may be tempting – owing to the growing economy – to just jump in and make a big investment with the hope of getting huge revenues. This action may be a very costly mistake in the end. Rather than investing blindly, it is better to test the waters by first dipping your toes. Invest small, then as you gain trust and understand the market terrains, invest more, probably in other businesses. This way, even if some don’t work out, you won’t lose everything. There are various stories of foreign businesses that failed because they were unable to compete with the unforgiving business environment.
Respect Intellectual Property
China frowns deeply on the theft of intellectual property. Before setting up your business, you must ensure that all your IP is registered to avoid being considered a fraud, and possibly face prosecution. Be sure to perform all necessary check on your business partner. You don’t want to merge with someone who has a criminal record, do you?
Ultimately, by following the right process, you will be highly successful in your business in China as the country is populated enough for your business to thrive. One thing about setting up shop in China is that you will always find your audience.