Doing Business in China
    Anything is Possible
     (Nothing is Easy)
Bio
    USA Today/NASDAQ/Ernst & Young
    Entrepreneur of the Year recipient,
successful USA Entrepreneur since 1982 and
...
Topics
Case Study
Chinese Business Culture
The importance of ‘Guanxi’
China’s Regulatory Landscape
Chinese Economic and Cu...
China Facts
Worlds Second Largest Economy
Average Double Digit GDP growth >20 years
1.3 billion Population
Excellent Infra...
Case Study
Koncept International, Inc.
Founded in 2004 by Kuang Peng (George) and Jeff
Holtmeier
Developed global VoIP platform
Konce...
Case Study
                  Challenges
Cultural dynamics
Building trust
Operational/Managerial differences
Time zone mana...
Case Study
                   Benefits

100 person R&D team at ~15% of USA cost
Young, smart, hard working
Customer focuse...
China Facts
More than 100 cities of more than 1m population
6 million fresh University graduates from 2009
  42% with engi...
Business Culture
Chinese Business Culture
         China            Cultural (Expression)           USA
         Spiral                   L...
Chinese Business Culture
           China               Value Differences              USA
     Relationship first        ...
Chinese Business Culture
               Basic Etiquette
Business (Name) Cards
Use of names
Displaying emotion
Guest-Host r...
Guanxi
             ‘Relationships’
Chinese rely on Guanxi
Critical to business success
Build trust with Chinese partner
I...
Guanxi
                How to build
Treat them nice
Do what you say
Be dependable, reliable (like a friend)
Frequent conta...
Guanxi
                   Is Not
Bribery
A replacement for how to conduct business
A reason to avoid proper due diligence
...
China Facts
China is almost identical in land size to the US
An estimated 3-500m people are unaccounted
Chinese invented p...
Regulatory Matters
Regulatory Matters
China’s laws
  Opaque
  Inconsistent
  Often arbitrary
  Unpredictable
  Constantly changing
Regulatory Matters
Different than USA
Impacts how you do business
Every industry has unique regulations
Central, Provincia...
Regulatory Matters
            China Structures
Representative Office
Joint Venture
Wholly Foreign Owned Enterprise (WFOE)...
China’s Constitution
          CHAPTER II. THE FUNDAMENTAL RIGHTS
                AND DUTIES OF CITIZENS
Article 35. Citiz...
More China Facts
         ‘Show me the Money’

China              2009          USA
$4.9 T             GDP           $14 T...
More China Facts
         ‘Show me the Money’
China has 128 Billionaires in 2009 to USA 403
  In 2000, China had 2
China h...
Chinese Food
Chinese Food
Chinese Food
Chinese Food
Chinese Cities
Shenzhen
Shenzhen
 Population: 13,300,000
Deng Xiaoping ‘Capitalism Test Market’ 1978
 One of the fastest growing cities in the wor...
Beijing
Beijing
Population: 17,430,000
Political, cultural and educational nerve center of China
Major transportation hub of the c...
Beijing Traffic
Shanghai
Shanghai
Population: 18,884,600
Became the largest cargo port in the world in 2005.
Center of finance and trade in mainlan...
?
Thank You

www.cu-bd.com
  info@cu-bd.com
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China USA Business

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This presentation give a basic information of doing business in China. It also show the culture difference between China and USA

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China USA Business

  1. 1. Doing Business in China Anything is Possible (Nothing is Easy)
  2. 2. Bio USA Today/NASDAQ/Ernst & Young Entrepreneur of the Year recipient, successful USA Entrepreneur since 1982 and experienced China Entrepreneur since 2004
  3. 3. Topics Case Study Chinese Business Culture The importance of ‘Guanxi’ China’s Regulatory Landscape Chinese Economic and Cultural Facts
  4. 4. China Facts Worlds Second Largest Economy Average Double Digit GDP growth >20 years 1.3 billion Population Excellent Infrastructure Nascent Business Environment Changing Economic Landscape
  5. 5. Case Study
  6. 6. Koncept International, Inc. Founded in 2004 by Kuang Peng (George) and Jeff Holtmeier Developed global VoIP platform Koncept Shenzhen Technology, Ltd. (PRC entity) and Koncept International, Inc. (DE-C) owned by an off shore holding SPV R&D, Customer Support in China, Sales/Finance in US Customers on 6 continents within 3 years
  7. 7. Case Study Challenges Cultural dynamics Building trust Operational/Managerial differences Time zone management Lack of formal plans Does ‘yes’ mean no?
  8. 8. Case Study Benefits 100 person R&D team at ~15% of USA cost Young, smart, hard working Customer focused Low taxes (special economic zone) Low OPEX
  9. 9. China Facts More than 100 cities of more than 1m population 6 million fresh University graduates from 2009 42% with engineering, math or science degree Labor force >800 million Worlds largest auto market-17m in 2010 China and HK own nearly ~$1t of US treasuries Chinese save >50% of income There are more than 420m Internet users in China Only 140k Lawyers in China!
  10. 10. Business Culture
  11. 11. Chinese Business Culture China Cultural (Expression) USA Spiral Logic Linear Difficult to say no Disagreement Argumentative Indirect Communication Explicit, Direct Subtle, Non-verbal Honesty Overt “We” oriented Self “I” oriented Context of the moment Thinking Rule based (Laws) Preservation of harmony Individual Need for achievement Guanxi, long lasting Business Relationship Superficial Loose Meeting Time Rigid Win-Win Conflict Results Winner and Loser
  12. 12. Chinese Business Culture China Value Differences USA Relationship first Interpersonal Economics first Virtue Humility Sign of weakness Accountable by generation Time Horizon Accountable by the quarter Seniority, Wisdom, Ability Command Respect Success, Achievement, $ Not righteous to bully Strong & Weak WIN! Weak preyed upon Strong Discipline Depends on person Openly receptive but… Openness More open Long memory, need to Shame Tends to be superseded by exonerate business priorities Mixed: business, individual, Priorities Tend to be all business nationalistic
  13. 13. Chinese Business Culture Basic Etiquette Business (Name) Cards Use of names Displaying emotion Guest-Host relations Using intermediaries Lunch, Dinner, Socializing
  14. 14. Guanxi ‘Relationships’ Chinese rely on Guanxi Critical to business success Build trust with Chinese partner Invest in the relationship Chinese prefer to do business with ‘friend’ Once Guanxi is established, more doors open
  15. 15. Guanxi How to build Treat them nice Do what you say Be dependable, reliable (like a friend) Frequent contact to establish bond Western companies need to ‘invest’
  16. 16. Guanxi Is Not Bribery A replacement for how to conduct business A reason to avoid proper due diligence Something that a Foreigner can learn Transferrable from an Employee
  17. 17. China Facts China is almost identical in land size to the US An estimated 3-500m people are unaccounted Chinese invented paper, ice-cream, compass, gunpowder, printing, and toilet paper (1300) Great wall is 5,000 km long and built 2,500 yrs ago Mandarin is spoken by more people than any other language (there are 200 dialects in China) China has more English speakers than USA
  18. 18. Regulatory Matters
  19. 19. Regulatory Matters China’s laws Opaque Inconsistent Often arbitrary Unpredictable Constantly changing
  20. 20. Regulatory Matters Different than USA Impacts how you do business Every industry has unique regulations Central, Provincial and Local regulations Change in regulations occur quickly Businesses do not rely on lawyers like USA
  21. 21. Regulatory Matters China Structures Representative Office Joint Venture Wholly Foreign Owned Enterprise (WFOE) Foreign Invested Commercial Enterprise
  22. 22. China’s Constitution CHAPTER II. THE FUNDAMENTAL RIGHTS AND DUTIES OF CITIZENS Article 35. Citizens of the People's Republic of China enjoy freedom of speech, of the press, of assembly, of association, of procession and of demonstration. Article 36. Citizens of the People's Republic of China enjoy freedom of religious belief. No state organ, public organization or individual may compel citizens to believe in, or not to believe in, any religion; nor may they discriminate against citizens who believe in, or do not believe in, any religion…. Article 51. The exercise by citizens of the People's Republic of China of their freedoms and rights may not infringe upon the interests of the state, of society and of the collective, or upon the lawful freedoms and rights of other citizens…..
  23. 23. More China Facts ‘Show me the Money’ China 2009 USA $4.9 T GDP $14 T $7,500 GDP per Capita $47,000 $428 B Debt $13 T $891 B Consumption $8 T
  24. 24. More China Facts ‘Show me the Money’ China has 128 Billionaires in 2009 to USA 403 In 2000, China had 2 China has 477k Millionaires in 2009, 4th in the world Bentley will sell >400 cars in China this year BMW sales in China have surpassed Germany Mercedes will sell 300k units/year by 2012 Audi will sell 200k in ‘10, doubling sales of ‘08
  25. 25. Chinese Food
  26. 26. Chinese Food
  27. 27. Chinese Food
  28. 28. Chinese Food
  29. 29. Chinese Cities
  30. 30. Shenzhen
  31. 31. Shenzhen Population: 13,300,000 Deng Xiaoping ‘Capitalism Test Market’ 1978 One of the fastest growing cities in the world 90% of the computer parts sold in the world are made here Pioneer in liberalization, both in terms of trade and politics Beneficial policy to attract foreign investment Lower cost of living than Hong Kong
  32. 32. Beijing
  33. 33. Beijing Population: 17,430,000 Political, cultural and educational nerve center of China Major transportation hub of the country Spent $40b in Beijing for 2008 Olympics Adding 15,000 new cars per week. 1 million in 2010
  34. 34. Beijing Traffic
  35. 35. Shanghai
  36. 36. Shanghai Population: 18,884,600 Became the largest cargo port in the world in 2005. Center of finance and trade in mainland China Has 56,347 foreign entities as of March 2010 Attracts 10.09% of foreign investment in China Preparing to allow foreign companies to list shares and sell bonds in the domestic financial markets
  37. 37. ?
  38. 38. Thank You www.cu-bd.com info@cu-bd.com

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