Five principles to conduct better business in china


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The dynamic economy that is China has been luring Western companies for decades, but recently it seems that more companies are taking the plunge.

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Five principles to conduct better business in china

  1. 1. FIVE PRINCIPLES TOCONDUCT BETTER BUSINESSIN CHINAFor additional information about Business with Chinaplease visit
  2. 2. www.China-Business-Connect.comThe dynamic economy that is China has been luring Western companiesfor decades, but recently it seems that more companies are taking theplunge.With a relatively untapped market and a growing middle class, there areplenty of consumers that need a wide variety of products and services.Most businesses have found that it is more challenging to adapt to thedifference in the business culture.The following principles to give your business the edge it needs tosurvive and thrive in China.2
  3. 3. www.China-Business-Connect.com1. DO YOUR RESEARCH PRIOR TONEGOTIATIONSMost companies are attracted by the potential of the Chinese marketand don’t do the required research that is required to have a realchance at success.They are following their industry without making the connections andlearning the lay of the business culture.Subsequently, there is a whole sector of business consultants that havegrown up around fixing all of the companies’ mistakes as a reactivecourse of action; versus just getting the data and analyzing it beforeeven thinking of entering China.3
  4. 4. www.China-Business-Connect.com2. BEWARE OF LOCAL INDUSTRIALDYNAMICS AND SUBSIDIESOne of the biggest reasons that companies experience a loss in China isdue to underestimating the competitive landscape; both local and otherforeign firms.Expect to face stiff competition from hundreds of local competitors,which may be subsidized and better received, as well as a growingnumber of foreign businesses.It is wise not to expect the landscape to change much in the future aslegal and business structures are slower to adapt in China.4
  5. 5. www.China-Business-Connect.com3. GATHER DATA AND ANALYZE WITH PATIENCEDon’t rush the natural progression of business and negotiations withpotential partners just because you want to be in the market quickly.Chinese business people will use this time pressure to gain favorableterms in partnership negotiations and could lead to committing to adeal that isn’t beneficial to your company.Set realistic guidelines and use the time to get to know the culture andstart making connections with other foreign as well as Chinesecompanies.5
  6. 6. www.China-Business-Connect.com4. CHINESE SOCIETY IS CLAN BASEDMost businesses confuse the concepts of collectivist for socialist, butChinese society is based more on helping who they know for socialpoints and favors that will aid them later.Getting into this special form of network building will allow you betteraccess to key decision makers and increase your odds during thenegotiations.This will also make doing business in the area easier with lawenforcement or other regulatory agencies. Often your Chinesecounterpart will be working towards zero-sum competition where oneparty wins and the other loses, but with the appropriate networkbuilding you can shift this tendency.6
  7. 7. www.China-Business-Connect.com5. TRUST IS HARD TO GAIN AND EASY TO LOSEWithin the Chinese society, trust is not given until it is earned and theyrarely trust people outside of their business network.Combined with the preference to do business with their network only,their lack of a well-functioning legal system has opened the door foropportunistic behavior, such as reneging on contract clauses.Keep this in mind when you are negotiating and build in your ownsafeguards.Also work to develop your own network of Chinese business people togain trust and improve your business success.7
  8. 8. For additional information about Business with Chinaplease visit