Eight Critical Steps for Your China Market Entry Strategy

2. Step 1 - Know yourself
“If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know
yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the
enemy nor yourself, you will succumb in every battle.” Sun Tzu, The Art of War
Do you have what it takes to succeed in China? Do you have a genuine interest and passion for the
China opportunity, or is it just business? From my experience, it takes more than just “business as
usual” to succeed in China and you need to make some kind of personal investment: emotional,
cultural and intellectual. Here are some of the things you can do:
• Read books about China. Understand
the history, culture and environment,
and how things are changing. Develop a
curiosity for the China opportunity, not
just from a business perspective, and what
it takes to succeed in China. Learn from
others who have been there before, not
just the success stories!
• Attend Chinese cultural and artistic
events in your home city. Eat chinese
food in your local Chinatown, attend
Chinese opera, ballet, dance or other
cultural shows, visit Chinese museums,
art galleries and historical sites, attend
Chinese events and festivals
• Go to China as a tourist, perhaps with
your family, and visit different cities and
rural communities. Take a bicycle in Guilin,
back-pack through Sichuan province, walk
through the Forbidden City and Summer
Palace in Beijing, and stroll along the Bund
in Shanghai at night. Immerse yourself in
the food, culture and history, and marvel
at the pace at which China is transforming
and modernising.
• Make friends and network with Chinese people in your home city, aswell as in China. Show a
genuine and heartfelt interest in how they think, where they come from, their values, interests,
fears and hopes, both for themselves and their families. Invite them to your house, accept
an invitation to visit theirs, and observe the way they behave, their customs, symbols and
superstitions, and look for areas of common interest, knowledge and understanding.
• Learn the language. Take lessons in Mandarin, learn some basic and common phrases and
tones, and practice and refine your technique. Understand how even a limited knowledge of
Chinese language opens the door to a much wider appreciation of Chinese culture, history and
social attitudes, and earns the respect and appreciation of your Chinese hosts and business
partners.
My interest, curiosity and passion for China began with my first visit as
a tourist to Beijing in September 1989 when I was living in Hong Kong. I
remember finding only one international hotel which was described as
“friendly to foreigners” and seeing more bicycles on the road than cars.
I have been back to Beijing many times since and am amazed at the
transformation of this great city.

3. Step 2 - prepare your people
“The Chinese use two brush strokes to write the word ‘crisis’. One brush stroke stands for danger; the
other for opportunity. In a crisis, be aware of the danger - but recognise the opportunity.” Richard Nixon
From my experience, the attitude, support, influence, energy and dynamics amongst the people
around you will be just as important to your success in China as your own personal development.
These include your shareholders, Directors, managers, staff and even your spouse and other family
members. I have seen many Chinese business ventures fail because of the rising negative attitudes
of key influencers whose voices get louder when the going gets tough. My advice would be to take
them on a similar journey as you, including:
• Running internal workshops,
seminars and personal
development sessions covering
language, cultural and
behavioural differences, and
prepare them for the challenging
road ahead
• Ensuring unanimous and
unequivocal support from all
stakeholders at the start of
the project, dealing with all the
negatives, fears and “what ifs” up
front, planning for the inevitable
challenges and roadblocks, and
ensuring they will all provide
support and encouragement
when the going gets tough (as it
inevitably will!).
• Bringing your family, especially your spouse, on the journey with you, including family holidays
in China, Mandarin lessons for the children, attending Chinese cultural events, eating chinese
food, making friends with chinese people in your home town etc. Knowing the high value and
emphasis placed on family values on the chinese side, it will be hard for you to succeed in China
if your spouse, in particular, is not willing to embrace the opportunity in a holistic sense.
• Instilling a corporate culture of curiosity, tolerance, understanding and diversity to support and
enhance your business activities in China. This has to come from the very top, be embraced
throughout the organisation, and reinforced by management. Remember, you’re only as strong
as your weakest link!
• Recruit, promote and/or attract Chinese staff, managers and partners into your business with
the appropriate knowledge, attitude, understanding and connections to work with you in China.
After allowing sufficient time to develop trust and shared values, be prepared to let them go
to further your interests in China, and invest your own time to mentor, support and encourage
them, rather than controlling them, ensuring at all times that they understand and appreciate
what you hope to achieve, your personal values and how they can help you. Create time for
them to brief and advise you during every step of the journey.
In September 2006, I organised and led a one week study tour to China for
the 23 principles of one of Australia’s largest accounting firms, WHK Group.
On the last night in Beijing, after sleeping out on the Great Wall, one of the
delegates told me that the trip had changed his life! I have had many similar
comments and reactions from other delegates since and I have come to realise
the importance of bringing everyone on the journey.

4. Step 3 - Prepare your marketing
“Prior Planning Prevents Piss Poor Performance”
Famous US Army quote
There are no short cuts here. Your success at home,
strength as an organisation and commitment
to China will largely be measured, judged and
evaluated by the quality and professionalism of
your marketing materials, as seen from a Chinese
perspective. You will need to source and retain one
or more marketing agencies/experts to support you
with this but, as a minimum, you will need:
• A corporate capabilities document, in Chinese,
articulating your value proposition in China, the
strength and depth of your organisation, the
experience of your people and the commitment you
are making to operating in China. A short one-page
executive summary will be useful aswell.
• A chinese web site, which operates effectively
behind the Chinese firewall (requiring a local
chinese domain (.cn), hosting service and leveraging
local plug ins, tools and SEO techniques) which
mirrors much of the content developed above (in
chinese) but includes local contact information,
social media sites and interactive tools (eg video,
live chat, Unionpay payment facilities etc.)
• A social media and e-commerce strategy to include and leverage local internet platforms,
notably the popular Wechat application but also many others
• Choosing a simple and widely acceptable chinese name for your business, and for you
personally and your senior team, demonstrating your understanding of the importance of
names, symbols, characters, colours and meaning in a Chinese context, and the value that a
well accepted name and brand will add to your China entry strategy. This will all need to be
effectively and professionally transferred to your business cards, wechat account, web site and
marketing collateral
Step 4 - Research – where, what, when, why and how?
“China is more a continent than a country. A fifth of humanity lives there. If China were organized like
Europe it would have to be divided up into 90 nation states. Today there are 11 cities in China with a
population of more than six million”. Professor Niall Ferguson, historian and Professor at Harvard
Whilst you will now feel you’re ready to get on a plane to China to start shaking hands and
exchanging business cards, you will be wasting your time, money and energy (not to mention the
patience and understanding of your stakeholders, mentioned in step 2) until you’ve done some
professional market research.
In September 2015, my colleague, Katya and I attended the
massive China International Fair for Investment and Trade
(CIFIT) show in Xiamen and prepared a chinese version of
our banner and worked with delegates to put their best
forward in front of the literally thousands of people who
filed through the Australian pavilion. Everyone left Xiamen
with literally hundreds of business cards. The challenge
was the follow up process.

5. China is not one market, its many markets, each with different characteristics, opportunities and
challenges, and the place you start (even if it doesn’t end up being the place you finish) should only
be determined after some proper research and an evaluation of different market entry options.
Otherwise, you’re “hoping for the best’ which isn’t the way you would approach a new market in
your home country! Amongst many other things, your market research should include:
• An evaluation of the characteristics of different markets and customer segments (preferences,
behaviour, propensity, breakdown) for your potential offering in China
• A review of different industry clusters in first and second tier cities to gain an understanding of
the potential and/or actual interest in your product, service or offer.
• A competitor analysis to determine likely competition and equivalent product/service offerings
which already exist in the market, including a review of competitor pricing and other important
factors eg, volumes, capacity constraints, supply chain issues, logistics, fulfiment issues etc.
• An objective criteria for selecting one entry strategy over another, and a ranking of each
potential success factor based on actual, anecdotal and real data, so as to generate a list of
possible entry points, in order of priority
• An overlay of your existing preferences, contacts, friends, connections and likely support
(including the presence of Government trade agencies and consultants which can make a big
difference in the early stages) knowing that the presence of existing and trusted relationships
and resources can make a huge difference in selecting one market entry point over another
• An understanding of seasonal factors, public holidays and timing issues to determine the
optimal time to launch your China initiative(s)
• A list of potential targets (partners, clients, customers, suppliers or investors, depending on
your requirements) and how to reach them (via introductions, trade missions, expos, events,
conferences etc.) so that you can build a prospect list and start contacting them to meet them
on your first business trip to China (see Step 5)
• A firm conclusion, with a summary of critical success factors, risks and opportunities , which can
be circulated to all stakeholders as clear evidence of the potential in China for your product,
service or offering
Only when you have reached this point, and received unanimous support from your stakeholders to
proceed to the next stage, that you can get on a plane to China!
In 2006, I found myself in China
conducting local on-the- ground
research which was actually more
anecdotal and qualitative than factual.
In those days it was very hard to
obtain anything other than primary
basic Government provided data. It’s
getting a lot better now.

6. Step 5 - Get on the ground
“The journey of a thousand miles begins with a single step.” Lao Tzu
With everyone on board, your market research done and your marketing collateral printed and
ready to go, its now time to get on the ground to test your assumptions, make relevant connections
and gain first hand experience of networking, relationship-building and operating on the ground
in China. From my experience, these first interactions and high level discussions usually go quite
well (and are actually quite fun as they usually involve toasting and eating!) and it will only be later
on, when you move into the implementation phase, that the real opportunity (if there is one) fully
emerges, but there isn’t much you can do about this yet.
The key at this stage is to meet lots of people, make friends, exchange business cards (and
Wechat QR codes) and talk enthusiastically about your business plans and opportunities in China.
The filtering of contacts into a priority list, and the deciphering of conversations into identifying
meaningful opportunities, will come later. At this stage, the do’s and don’ts for conducting
meaningful meetings with potential customers, clients, investors or partners (as opposed to
informal discussions at a networking reception or dinner) include:
• Hiring your own professional interpreter, sourced from a trusted supplier or friend, who is
familiar with your industry, understands some of the jargon and technical terms that will be
used in the meetings and has been fully briefed (by you) in advance. Avoid the temptation (for
convenience, cost savings or other reasons) to work with an interpreter who has been loaned
to you by someone else or a friendly bilingual person who offers to help. There are numerous
examples of how this can backfire on you!
Whilst I have organised and led many trade missions, study tours and delegations to China, I have only attended
one trade mission myself and this was in 2011 which was an Australian Government mission to the cities of
Guangzhou, Wuhan, Changsha, Chengdu and Chongqing. It was a great opportunity for me to visit many of these
cities for the first time as part of an organised and structured official Government delegation and a great example
of how trade missions can deliver good value to first timers.

7. • Making sure you conduct a proper debrief with your interpreter and colleagues (if present)
after each meeting and writing down some brief notes to remember the outcomes of the
meeting and any next steps. This could include an objective “score” (out of 5) for the meeting
to assist you later when you attempt rank each prospect into an order of priority (A, B, C). Your
interpreter is likely to have picked up on any number of non verbal communication cues during
the meeting (eg conversations taking place between other participants, or positive or negative
body language) and you should encourage him/her to pass these on whether important or not.
(note your interpreter may feel too shy, inexperienced or awkward to volunteer this kind of
valuable information to you, so you may have to win their trust and confidence before they can
do this freely)
• Evaluate different options to start meeting the right people in China. Government sponsored
trade missions and delegations, if properly organised, targeted and tailored (preferably to your
industry or target area in China) can be cost effective and valuable
• Stay clear about your objectives and the purpose of these initial interactions which are more
about “making friends” and discussing opportunities than to “win a deal” or start signing
contracts. Please refer to my “Three Cups of Tea” story to understand the journey you have to
go through before reaching a point where you can do actual business with any of these people!
Any attempt to cut corners in this process, no matter how enthusiastic the other side are
about your product or service, will usually lead to disappointment later. I know this from bitter
experience!
• Ask each person you meet how they will prefer to communicate with you after the meeting ie by
email, phone (if by mobile, make sure you have their preferred number) wechat or some other
method? Its critical that you establish this with them in person before you leave them as, apart
from making it easier for you to progress your discussions to the next stage, you will be able to
gauge their level of interest by how easy they make it for you to follow up afterwards!
• Don’t become despondent if one or two meetings don’t turn out as hoped or expected. And
don’t reach early conclusions, and start acting on them, until you’ve seen everyone and can
evaluate the whole trip. As I often say to my delegates, “Think of the program like a puzzle. Its
only when all the pieces have been found and placed that you can see the whole picture”!
Step 6 – Follow up and build your China Network
“Cross the river by feeling the stones under your feet” Deng Xiaoping
Now that you’ve spent some time on the ground in China, met lots of people, collected business
cards and wechat contacts, had some positive meetings and returned with high expectations, its
important that you follow up straight away.
This may sound obvious but I have experienced many examples of this taking too long or even, in
some cases, not happening at all! Momentum is everything in China (see Step 8) and you can’t afford
to allow much time before you follow up, at least with your Priority A list (and possible some Bs).
China is a fast moving environment and you will be quickly forgotten by the roller-coaster of other
priorities, opportunities and challenges that come their way. It’s best to “strike while the iron is hot”
and conduct your follow up campaign the moment you return to your home base. Some do’s and
don’ts include:
• Plan your next trip straight away (say within 3 months), block out your diary, book the flights

8. and start identifying how you would like your next meetings to turn out. Start with the end in
mind.
• Send a message to everyone you met (preferably in Chinese) thanking them for seeing you,
sending a soft copy of your marketing collateral and a link to your chinese web site (for their
convenience, as the hard copies may have already been mislaid or discarded) and providing the
dates of your next visit.
• For your “Priority A” list, request a time/day to meet them again on your next trip, preferably
with their boss, business partner or senior colleagues present, to advance your discussions.
Whilst this can be done by email, you should expect emails to be lost in their spam filters or
won’t get read at all. Wechat is usually the preferred method of communication in China and,
if in doubt, a follow up phone call (by or with your interpreter) to the phone number they gave
you at your meeting will ensure that they get the message and respond. Don’t assume that no
response means they’re not interested!
• Start thinking about your follow up meeting? What do you hope to achieve from seeing them
again? How can you prepare them for this in advance? What documents or information can you
prepare (in Chinese) and possibly send to them before you see them again? What will be the
follow up from this next meeting, perhaps an invitation to visit your operations in your home
country?
• Conduct some initial due diligence, research and perhaps a simple investigation on your
potential business partners, clients or suppliers in China? Check out the facts and verify the
details they’ve already told you from an independent source? And find out more than they know
you know? Better to do this now before you get any deeper into the relationship? Don’t take
things at face value, no matter how tempting. There are no short cuts!
• China is a hierarchical society where seniority and age is highly respected and valued. You may
have to cast aside your egalitarian preferences and start to mirror their approach to get access
to their senior decision-makers. In other words, if you are the most senior person on your side,
you may need to deploy middle managers to meet with their lower level executives and hold
yourself back for when they are willing to bring out their Chairman! This is easier said than done
and requires some thought, advice and tactical thinking up front.
• Remember at all times the importance of trusted and deep relationships in China and the need
to continue building your support network in China and talk to your local compatriots (is there
a chamber of commerce you can join?) to learn more about their experiences in China and what
you will need to succeed. You’ll never know when you’ll need them!
Our own China network in
Guangzhou is growing rapidly and
we now offer a well developed
platform to assist SMEs get on the
ground in China and develop a
market entry strategy. But it took
two years to reach this point and
we’re still learning, growing and
developing all the time!

9. Step 7 – Getting Started
“Showing up is 80% of life. Sometimes it’s easier to hide home in bed. I’ve done both.” Woody Allen
Whilst it is still too early to expect any real business to get done (ie contracts signed, money
exchanged, orders placed) you are now back on the ground in China for your second business
visit and you should now feel you are making some progress. The fact that you are coming back
places you ahead of most of your global competitors and, assuming that your follow up process has
been successful and you’re returning for confirmed second meetings, it seems clear that you have
something to offer and more than a passing interest amongst your prospective clients, suppliers
and partners in China. It’s now time to try and move things forward to a point where some actual
business can occur. Here are some do’s and don’ts:
• Make sure you’re clear about the purpose of each meeting and the outcome you’re looking for.
It may not be possible to achieve this (remember that the Chinese will want to know and trust
you before they will be willing to proceed further) but at least you have your own road map
clear in your head
• Turn up with a nicely wrapped gift from your home country and have this ready to give to the
most senior people in the room, starting with the big boss. Don’t insist that it gets opened (as
it almost certainly will quickly disappear from view after the obligatory photos and formalities
have been completed) and regard it as simply symbolic and a show of respect.
• Be willing to go with the flow and stay flexible. From my experience, if any business is going to
get done, there will be lots of lunches, dinners and toasts to get through before any progress
can be made, so don’t be surprised if you spend most of your time in restaurants and karaoke
bars. Whilst it may not seem that anything productive is going on, you are actually moving to the
“second cup of tea” and that’s a good thing!
• I like to start a business relationship in China with some kind of Memorandum of Understanding
(MOU) setting out the intentions of both parties in plain English (translated into Chinese) in a
non legally binding format and allowing both parties to sign to signify their understanding and
agreement. This also creates an opportunity for a lavish and symbolic signing ceremony (with
photos, witnesses and smiles all round) which at least demonstrates that something serious
The signing ceremony for an MOU between the Australia China Economics
Trade & Culture Association (ACETCA) and the Australia China SME Association
(ACSME) witnessed by members of both groups. A good example of how to turn
a simple signing into something of an occasion!

10. has occurred and keeps everyone focused on the journey ahead. Whilst this is nothing but a
worthless piece of paper in practice, the symbolism and process of signing something together
is a good statement of serious intent, and it allows the next steps to be clearly laid out for
everyone to follow.
• A potential next step after a successful second meeting, and to keep moving forward, is to
invite your Chinese partners to visit your local operations in your home country and to assist
with their visa application by sending them an official invitation spelling out the purpose of
the visit and how it will result in future trade and investment opportunities for both countries.
This will give you a chance to repay the hospitality they will have displayed to you in China and
show them how much you appreciate and enjoy their company. If they accept your invitation
and follow up with a visit, you can be (reasonably) sure that they are serious about pursuing a
business relationship with you.
Step 8 – Momentum is everything
“It does not matter how slowly you go as long as you do not stop”. Confucius
If you’ve reached this final step, you are almost certainly well on your way to succeeding in China
and now its all about building momentum, continuing to move forward with your local partners,
suppliers and clients, and managing your costs, people and expectations. If only it was this
straightforward! From my experience, it’s never over until it’s over, and you can never take your
foot off the pedal. After all, you’re dealing with a market of over 1 billion people and, as I’ve said
many times, if you gain a foothold in China, your Chinese operation will surely dwarf your business
at home and you’ll quickly become a fully fledged China company. Why would you spend your time
anywhere else?
So a few final thoughts as you bask in the glory of being one of the very few foreign companies that
ever succeed in China:
• You will probably end up needing to live in China with your family. Anything less could send
out a negative signal to your Chinese counterparts and you should at least be prepared for this
possibility in advance. If you are simply unable to do this, for personal, business or any other
reasons, you should prepare for this by grooming an appropriate person (preferably a Chinese
speaker with local connections) to be your General Manager in China and explain this to your
local partners at an early stage. It will of course be necessary for your designated local GM to
I have attended many formal, informal, productive
and unproductive meetings in China, including
lunches, dinners, banquets and parties, and I always
pay attention to the local formalities, customs and
procedures that they follow in different circumstances.
I particularly enjoy their formalities, especially their
hierarchical approach, but also their self-effacing
nature which comes out at times and lightens the mood.
I sometimes wish we were a bit more formal in the
western world, as we were when I first started in London
in the late 1970s, and, as we move deeper into the
Asian Century, perhaps it will become necessary for us
to change our approach to adopt a more Chinese style.
Perhaps they’ll change a bit too.

11. be part of the relationship-building process from an early stage as they will effectively be your
substitute on the ground for the future.
• Remember the importance of family values in China, particularly the aspirations, career
development and educational ambitions that successful and wealthy business people have
for their children. Actively look for opportunities to host, mentor or support their children, by
helping with a place in a university or finding them work experience in your home country. This
kind of voluntary support and help will be extremely well received by your Chinese counterparts
and will almost certainly help in cementing the business relationship.
• Keep finding opportunities to move the relationship forward. Turn up regularly, buy gifts, host
dinners, celebrate milestones and show your interest and appreciation for Chinese culture,
history and their rapidly changing business environment. Everyone likes to hear nice things
about the place they choose to live from visitors, particularly foreigners, and China is no
exception!
• Become a keen observer of how they behave, what they enjoy doing, how they line up at
meetings and the way they prefer to communicate with you and your team, and seek to mirror
this yourself. Teach them about your culture, the way you do things and the differences
between the two environments from a business, cultural and lifestyle point of view. See how you
can incorporate the best of both worlds into your business venture. A win-win for both sides.
about the author
David Thomas believes that every company, big or small, MUST have a China strategy. He travels
from Asia to inspire, motivate and educate business leaders, entrepreneurs and investors around
the world on the massive potential created by the rise of China, and he supports them on their
journey to identify, build and facilitate long term business and investment relationships.
David’s unique value lies in his ability to not only identify business trends,
opportunities and challenges in China, but also his “hands on” experience
from having worked on the ground for the past 12 years. He is
therefore able to illustrate and enhance his presentations by including
practical examples, case studies and anecdotes from his own personal
experiences and stories.
Having worked with SMEs from many industry sectors (e.g. retail,
professional and financial services, manufacturing, food, tourism,
education, publishing, real estate, design and technology) David’s
experience and expertise is broad and deep. He regularly speaks at
Conferences, Workshops, Seminars and Board Meetings to a wide range of
audiences and industry sectors and tailors his presentations accordingly.
He regularly travels to China to work with local partners and investors, as well as hosting Chinese
delegations and missions of investors, SMEs and entrepreneurs around the world. Find out more
about David’s personal story in an interview with the China Daily Asia.
www.davidthomas.asia
support@davidthomas.asia
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