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Even with all the trade-related concerns, businesses are still attracted to China for its 1.3 billion consumers, cost of manufacturing and burgeoning middle class. With all that is attractive about doing business in China, over the past 10 years I have also found a wide range of idiosyncrasies, cultural differences and political realities that I wish I knew how to navigate before I started.
My company is fast-growing menswear brand that produces over 25,000 custom pieces a year from China, mostly in the Shanghai area. After researching local North American manufacturers and other Southeast Asian countries, I found that Shanghai had the breadth of manufacturers to create a strong tailoring ecosystem, as well as the professionalization and delivery infrastructure to be our chosen hub of business. We maintain a team of a dozen staff there that supports our U.S.-based retail business.
If you’re considering doing business in this growing market, here are my top dos and don’ts:
Don’t believe you know better than the locals.
There are countless war stories from Uber to Groupon to Google that have needed to backtrack on their China strategies. No matter how much you read about the culture or study the business environment and the industry you will be operating in — and you should definitely do both of those things — it’s unlikely that you’ll have the desired success without working with a local partner. They’ll find a way to help you with logistical issues such as translation, permits and government regulations, as well as with other concerns such as networking and navigating the particulars of Chinese culture. We used to work directly with manufacturing partners but over time invested in our own team on our own payroll to manage all our vendor relationships.
Cultural differences can sink a deal.
Even if you have only a passing knowledge of Chinese culture, you probably know about some of the significant ways that it differs from western culture, such as the fact that they still hold certain holidays on the lunar calendar in high regard. We found out the hard way that manufacturing comes to a complete standstill over the new year break. You will not be able to find a producer no matter what you are willing to pay.
Learning to appreciate the small cultural symbolisms that make up part of daily life, such as symbols of good luck (the color red, the number six and dragons) and symbols of bad luck (sticking your chopsticks vertically into a dish, the number four and giving shoes as a gift) will go a long way to endear yourself.
Make your decisions based on long-term strategy.
Ever since their economy became one of the fastest growing in the world, Chinese customers and business leaders have been wary of Westerners coming in to make a quick buck. China is steeped in thousands of years of heritage. Prove to them that you’re not one of those Westerners by building relationships and collaborating with people who are invested in your long-term plan for business in China.
Learn to navigate the political realities of Chinese businesses.
In the U.S., there are several industries in which you can operate where political interference will be negligible. In some cases, you can get away without having to contact any government agencies except the state and federal tax offices. That is never the case in China, where government entities have some measure of control over everything. This starts with entry into the country — you will need to go to the Chinese embassy and apply for a travel visa. Once you arrive in China, you will need to report to the local police station so they can recognize your occupancy. We didn’t do this on one of our extended China trips, only to receive a scary knock on the door a couple of weeks later.
Craft a sales pitch that addresses Chinese values.
Just as you would modify your sales pitch to ensure it addresses the specific needs of value of any customer, you should do the same for the Chinese marketplace. For instance, many Chinese consumers abhor making frivolous purchases, but the market for luxury goods in the country has exploded in recent years because of a desire to buy quality products.
As you walk the glitzy streets of Shanghai and Guangzhou, it may seem like China is just like any other western country, but your sales pitch needs to account for the fact that its people often hold specific values that go back for centuries.
Reports state China will become the world’s largest economy by 2032 so there is plenty of time left to learn how to navigate the market to your success.
January 10, 2019 at 09:18AM
Forbes – Entrepreneurs