Doing Business in China

8 rules to succeed doing Business in China. (1) I had just returned from an opening ceremony in Chengdu to launch our community center (2) I had just received my class evaluation (3) I had spent an hour and a half talking about what “success” means in Chin and (4) I had a few minutes to put together a post (I have been struggling with this for the past 2 months).

All very positively oriented goals, and I would agree with them, I would say for anyone who is in China there are a number of additional rules that would need to be included into a “how to succeed post”.

8 rules to succeed doing Business in China.The first being.. show up with reasonable expectations.  It is not a rule that is meant to limit anyone’s dream (Starbucks does have 90+ outlets in Shanghai), but a lot of people/ organizations that I speak with when looking to enter China (or in the middle of launch) often have unrealistic expectations… or at least have yet to fully put into context the amount of investment it will take in time, money, and capacity to achieve those goals.

8 rules to succeed doing Business in China.Second: Develop a high tolerance for pain.  Want to be innovative?  cut a new path?  Don’t expect it to be easy, and don’t give up.  Things go right and wrong everyday, and regardless of how wicked the ride may be, as long as you are meeting expectations (see #1) and the reward is worth it, then it is worth it to persevere.  Cutting corners in the face of pain is the quickest way to move the defenses of a line backwards(see #3) and that will only land you in further trouble later.

8 rules to succeed doing Business in China.Third. Have lines (moral and economic) that cannot be moved.  Stand up for something and develop a business model that you control and remember that if your supplier is messing around now, they will mess around later – unless you take the necessary actions (not doubling down) to rectify the situation.

8 rules to succeed doing Business in China.Fourth.  understand what the motivating factors are for the parties sitting across the table, stop negotiating, and begin collaborating.   If you are walking into a meeting preparing for a heated pissing contest why bother?  There are no deals of the century in China, no deal has to be done today, and there are options.  Take the time to understand what is driving the person today, and what it will take to keep that party moving in the right direction (right director = down the same path as you), or cut the cord and develop another line.

8 rules to succeed doing Business in China.Fifth: Plan ahead, speak up, and move quick… when things do go wrong.  Before launching a new product, or sourcing a new product, spending the time to to fire drill the what ifs can go a long way to preparing firms and their managers for when things don’t go right.. it may only require a tweak.  It may require a nuke.  But, knowing the signs and the available remedies ahead of time is far better than finding yourself in crisis mode not sure what to do and calling on externals to fix things.

8 rules to succeed doing Business in China.Sixth: Pay the full real costs up front. Factoring in the costs of negative externalities is a must…  Regulations and consumer expectations are only getting tighter, and firms who are caught on the wrong side of a moving regulation are going to pay more to bring themselves into compliance.  Want to use a supplier who abuses line workers, you will pay the cost.  Don’t care if your supplier dumps chemicals into the river, someone else will.  Think that hongbao is the “key” to a relationship… what happens when they go to jail?  Price in the costs of choosing suppliers, partners, and channels that follow global standards… cause local standards are only going that way, and anything local+ will require upgrading at some point… at a cost that is far more uncertain than if you build your platform on it now.

8 rules to succeed doing Business in China.Seventh: If something does go wrong, look internally first. It is not always the pain suppliers fault, or a nationalistic regulation.  When things fail it is typically no more than the byproduct of a failed process or system.  Identify that, work with it, and move on.

8 rules to succeed doing Business in China.Finally… shut up and get to work.   I cannot possibly begin to list off the business ideas that I have heard, how many were “in the bag”, the fund is raised, blah blah…and how few of those ideas and people are still here.

http://www.allroadsleadtochina.com/2010/03/08/a-few-rules-on-succeeding-in-china/