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

1. FIVE PRINCIPLES TO
CONDUCT BETTER BUSINESS
IN CHINA
For additional information about Business with China
please visit www.China-Business-Connect.com

2. www.China-Business-Connect.com
The dynamic economy that is China has been luring Western companies
for decades, but recently it seems that more companies are taking the
plunge.
With a relatively untapped market and a growing middle class, there are
plenty of consumers that need a wide variety of products and services.
Most businesses have found that it is more challenging to adapt to the
difference in the business culture.
The following principles to give your business the edge it needs to
survive and thrive in China.
2

3. www.China-Business-Connect.com
1. DO YOUR RESEARCH PRIOR TO
NEGOTIATIONS
Most companies are attracted by the potential of the Chinese market
and don’t do the required research that is required to have a real
chance at success.
They are following their industry without making the connections and
learning the lay of the business culture.
Subsequently, there is a whole sector of business consultants that have
grown up around fixing all of the companies’ mistakes as a reactive
course of action; versus just getting the data and analyzing it before
even thinking of entering China.
3

4. www.China-Business-Connect.com
2. BEWARE OF LOCAL INDUSTRIAL
DYNAMICS AND SUBSIDIES
One of the biggest reasons that companies experience a loss in China is
due to underestimating the competitive landscape; both local and other
foreign firms.
Expect to face stiff competition from hundreds of local competitors,
which may be subsidized and better received, as well as a growing
number of foreign businesses.
It is wise not to expect the landscape to change much in the future as
legal and business structures are slower to adapt in China.
4

5. www.China-Business-Connect.com
3. GATHER DATA AND ANALYZE WITH PATIENCE
Don’t rush the natural progression of business and negotiations with
potential partners just because you want to be in the market quickly.
Chinese business people will use this time pressure to gain favorable
terms in partnership negotiations and could lead to committing to a
deal that isn’t beneficial to your company.
Set realistic guidelines and use the time to get to know the culture and
start making connections with other foreign as well as Chinese
companies.
5

6. www.China-Business-Connect.com
4. CHINESE SOCIETY IS CLAN BASED
Most businesses confuse the concepts of collectivist for socialist, but
Chinese society is based more on helping who they know for social
points and favors that will aid them later.
Getting into this special form of network building will allow you better
access to key decision makers and increase your odds during the
negotiations.
This will also make doing business in the area easier with law
enforcement or other regulatory agencies. Often your Chinese
counterpart will be working towards zero-sum competition where one
party wins and the other loses, but with the appropriate network
building you can shift this tendency.
6

7. www.China-Business-Connect.com
5. TRUST IS HARD TO GAIN AND EASY TO LOSE
Within the Chinese society, trust is not given until it is earned and they
rarely 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 for
opportunistic behavior, such as reneging on contract clauses.
Keep this in mind when you are negotiating and build in your own
safeguards.
Also work to develop your own network of Chinese business people to
gain trust and improve your business success.
7

8. For additional information about Business with China
please visit www.China-Business-Connect.com