1. Facts in China
For those who is keen on developing Chinese market
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17-Jan-2016
Sector I:
1. China will be the largest GDP nation in the world by the end of 2014, issued by the World
Bank. Source from http://www.ft.com/cms/s/0/d79ffff8-cfb7-11e3-9b2b-00144feabdc0.html
2. The economy is driven by instruction from the government or by state owned companies, not
by private sector. The power ratio between them could be 8:2.
3. At each office of government and state owned companies including all kind of research
centre, university and institute and associates, authority is the only law or his/her power is
bigger than law, discipline and regulation.
4. Doing business in such system, Guanxi (Relationship) is the only issue, much more important
than product quality and services.
5. If your product is sold to the above mentioned industry, you have to build up Relationship
Network, in stead of Sales Network. If you pay a little attention on both meanings of phrases,
they are far from the same.
Sector II:
1. The price of each item could be 1 to 20 times in difference. It is varied because of buying
power, supply chain, freight charges, labor cost, working efficiency, rental fee, taxes, quality
and workmanship etc. This made people like to bargain, thus bargain nearly becomes a kind
of Chinese culture (the same story happens in most of the poor countries). You would be
unhappy if you pay $10 to buy one item the same time your colleague bought it with one
dollar only.
2. In many luxury shops, no matter in Harrods of London or Lafayette of Paris, you will see
Chinese bargaining with Saleswomen while proudly showing he/she is RICH to consume
GUCCI, Louis Vuitton and, Hermes etc.
3. National Standard (Guo Biao, shorten as GB in Chinese, means National Standard) is
effective in very few area and works very little. Power is the only standard so that National
Standard is far from your life. This is another reason that caused varied prices. People can
produce whatever he wants. If my figure is not wrong, less than half of the goods on the
market or in Chinese life can meet GB.
4. Costs of life and running business in China is huge and is much bigger than that is in Europe
or US. With variety of costs, such as traveling fee, entertaining expense, labor costs, rental
fee and commission (bribes) etc. you would get only 10% to 20% profits after double or
triple your price from original costs.
5. Customer prefers to buy imported goods from Exclusive Distributor, not through sub-dealer
and its following subordinates. They are afraid of paying extra charges and they like to get
everything origin (and from the origin).
6. Distributor wants to be exclusive, not because of the discounted price, but because of the
authority. No manufacturer will offer more than 50% of discount to its Distributor, but the
distributor in China can only get not more than 20% profits after double the cost.
7. Every company wants to be Exclusive and every company does not want to be a sub-dealer.
8. No single company in China has the ability to cover the whole nation. This means you cannot
count on solely one for your business, which means Exclusive Distributorship might be

2. Facts in China
For those who is keen on developing Chinese market
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barrier of expanding the market.
9. What about NOT authorizing Exclusive Distributor and managing several distributors direct
by the manufacturer? The answer is definitely positive-YES but in practice few of them got
successful. Your slightly ignorance of something may damage your whole strategy if you are
not familiar with local habit, culture, or law.
10. A person without knowledge about China is too hard to control even more than 2 companies
at China. Without basic knowledge of the culture and experience working & living in China,
the way of doing business here in reality is rare succeed.
Sector III:
1. Language is another barrier when you dealing with Chinese. People presently start studying
English from Grade 3 at Primary School or earlier in pre-school and the English education
lasts up to college/university, but few of them are capable of communication (mainly people
cannot write, listen well and cannot speak).
2. The one who has Major in English always does not understand technology and the one who
knows technology always does not understand English well. Probably 0.1% of them is
capable of understanding both.
3. 60% of the English learner can read. 5% of them can listen well. 5% of them can speak and
3% of them can write. For comprehensive capability, probably 0.3% of them can be high
efficiency and skillful (please do not calculate the results by mathematics).
4. Without experience working in China for more than 5 years, people get well educated at
overseas is NOT capable marketing products from foreign country to China. The lack of
knowledge of China will made it failure of work.
Sector IV:
1. If we say standard is the law for industry, similar to the existing social law, it is almost blank
in China. Without Standard or with Standard just pasting at wall, people hardly realize the
importance it is.
2. In most of the factory, people do not have Temperature Gauge or Thermometer to measure
temperature. Or the meter is NOT calibrated according to Manual. They do not realize it is of
a problem because it seems nothing happened in the past.
3. Many people buy a plug to put it into the buckle instead of plugging the safety belt into it
while seated in a car. They do not think accident might happen in the next minute, but think
he/she was safe in the past 10 years.
4. You can easily find rusty Stainless Steel in China. You can hear WE CAN EASYLY COPY
THAT when people see anything from the market. But the reality is the whole nation cannot
produce a car independently after investing more than 15 years by the state.
5. The Western likes new technology or upgraded product. But Chinese prefers simply cheaper.
If a bridge has budgetary of one million designed by an architect, the Officer might cut it to
0.9 million, showing his power and authority. This means the builder will finally use low cost
of material to build the bridge, which can use for 5 years only, in stead of using 20 years as
designed.
6. Size, volume and quantity is more important than quality. They will think a company with 200
employees is better than a company with 10 only.