Expanding overseas

12 tips for entering the Chinese market

4 min read

China is an enormous market with many layers. Like all markets China has culture and business characteristics that are unique but they also have many similar motivations to business markets worldwide.

Identifying and seizing quality business opportunities in China requires a commitment to understanding the market environment and becoming familiar with how to do business in China. The tips below represent the first step in learning about the world’s biggest market only a few hours behind New Zealand on the world clock and a relatively close Pacific Rim neighbour.

1. Which market is for me?

China is a collection of many markets defined by culture, language, geography, demographics, local government, developmental stage and numerous other factors at a micro level. China is made up of cultural regions, megacities, and second and third tier markets which all provide unique opportunities and require different approaches.

Clearly define a target market of a realistic scale where you have identified a distinct opportunity. Large differences exist between markets and care must be taken to identify the market or markets that offer the greatest opportunities for your business.

2. How do I find the right partner?

Spend time understanding the market. Learn who the end user of your product or service will be and how you can get as close to them in the supply chain as possible. Relationships are extremely important and require considerable effort to establish, maintain and grow. The sincerity of relationships formed with the right local partners has a major influence on a company's ability to succeed in China. Identify firms and individuals that can provide the assistance and networks needed to access the market being targeted. Avoid wasting resources on relationships that do not justify the investment of time and effort required to maintain them.

3. How much time should I put into developing the market?

Patience is essential when entering Chinese markets. Whether identifying the right distributor or concluding a deal, things will take longer than expected. Remember as New Zealand businesses are assessing potential partners their Chinese counterparts are doing the same thing. They know less about New Zealand and have their own stereotypes about us, so building trusting relationships over time is an essential step leading to successful partnerships.

4. How do I relate?

Though clear differences exist between China and New Zealand on a number of levels, the similarities are many. Shared values based around national identity, family, friendship and the desire to prosper through business provide common ground on which to form bonds. Focus on commonalities and demonstrate understanding of their culture as a basis for building and strengthening relationships.

5. How important is knowing Chinese business etiquette?

Understanding formal and cultural aspects of etiquette is vital. From business cards and business attire to understanding the significance of social occasions in the non-stop world of Chinese business, every aspect will inform prospective partners’ assessments of you as a business partner. Be well prepared with agendas for your meetings prior to heading to China. Arrange meetings one or two months in advance and be punctual. Pay genuine respect to protocol and tradition and accept contradictions and last-minute changes without frustration. These are an expected and accepted part of doing business in China.

6. How can I communicate effectively?

Ensuring mutual understanding of negotiations and agreements provides the bedrock for prosperous long term relationships. Invest in ensuring you and your partner are clear about intentions, objectives and expectations. Use translators for accurate understanding during discussions. Never assume there is mutual understanding. Leave nothing to doubt, interpretation or speculation. Clearly summarise understandings and expectations in writing before progressing to next steps.

7. How should I allocate time when visiting China?

Business is a lifestyle in China so embrace the 24/7 culture. Be prepared to meet business associates in social settings on evenings and weekends. Chinese separate business and socialising so dinners are not the place to do business deals however if a deal is done it is at the end of the meal, after a few drinks so keep your wits around you.

8. How vital is my contract?

On a business level, basic principles of due diligence apply to China as to any other market. Conduct thorough research on all aspects of a prospective partnership or deal and act accordingly. 9. How do I work with the Chinese Government? Government and the Communist Party play key roles in all aspects of Chinese life. Though private enterprise thrives, official connections are essential to business success. Try to gain an understanding of how the national and local governments are structured so you are aware of who are dealing with and the roles that they play. Look to leverage national and local government relationships to enhance credibility and status.

10. Will I be Successful?

Despite the considerable opportunities presented by China's sizeable and rapidly growing market it is complex and the potential for failure is high. Draw on the experience of those who have achieved success and avoid going it alone. Local support is key and advice should be sought at all stages of the process.

11. Will Chinese customers buy my products?

Not understanding the relevance of your offer in China is a sure fire way to stall at the start line when looking to enter the market. Purchasing and usage behaviours need to be understood to confirm if your offer fits with the local cultural norms. When it comes to taste, colour, aroma, texture, appearance, and sound, something as simple as apple juice has a need to be adapted to appeal to local consumers on an ongoing basis. So to be relevant ensure you understand the exact context your product will be sold in and that it is market ready.

12. What social media is available in China?

China has its very own internet Weibo is a Chinese microblogging website. Akin to a hybrid of Twitter and Facebook, it is one of the most popular sites in China, in use by well over 30% of Internet users, with a market penetration similar to the United States' Twitter. It was launched in 2009 and has 503 million registered users as of December 2012. About 100 million messages are posted each day on Sina Weibo.

Baidu, incorporated on January 18, 2000, is a Chinese web services company headquartered at the Baidu Campus in Beijing's Haidian District. Baidu offers many services, including a Chinese language-search engine for websites, audio files and images. In December 2007, Baidu became the first Chinese company to be included in the NASDAQ-100 index.