From DCCC our business experience working with the Chinese manufacturers and producers, we understand that why some Dutch companies, particularly small-sized & middle-sized Dutch companies have some challenging time in conducting their business with the Chinese.
Especially finding the right and reliable Chinese manufacturers (producers) to work with. Maybe here we can share some thoughts on the topic that most Dutch (mkb) companies are facing. We have collated a few suggestions on how overseas companies can work effectively with the locals in China.
The China market is increasing over the years and many foreign companies are considering about entering into China. However, many have heard about the downside of failed China market entry and are worried about the complications of the China market. But as long foreign investors learn and understand more about the Chinese business culture and the local competitors, they would be able to develop a strategy to counter problems that they might face when entering the China market.
For a successful partnership, both parties need to go the extra mile to learn more about each other culturally and their business styles. The Chinese are not difficult to work with. As long as we are familiar with the way they work and their style of negotiation, overseas companies can collaborate with local organizations and expand their enterprise into the China market. Since the China market consists of mainly local organizations, overseas companies would need to have contacts among the locals to enter into the China market.
1. Knowing Chinese Business Culture is Key Forward Step
Many foreign investors find it very frustrating to work with the Chinese because firstly they do not understand the Chinese language and culture, and secondly they feel that the Chinese have a different sense of business style. Language barriers cause conflicts and miscommunications among the parties. Thus, for foreign investors to successfully enter into China market, they would need to be able to communicate and negotiate with the locals.
The people in China have a strong national and culture pride thus it is of no surprise that the Chinese tend to carry out their business according to their beliefs and values. For example, the Chinese places a high importance on respect in society. Hence, at the workplace, the Chinese have a high respect for their superiors and their co-workers. Thus, foreign investors would need to recognize that that they need to be respectful when talking to the Chinese during business meetings. If the Chinese feel that the foreigners are unknowingly disrespectful, the foreign company may not be able to strike a deal with the locals.
Furthermore, the foreign companies need to understand how the Chinese carry out their business here. As China is only an emerging market, not many companies understand the Chinese business culture. In China, the locals are very concerned about building up good relationships with their partners and clients. Therefore, the Chinese will put in a lot of effort and time to socialize with their clients before settling on a deal. Even though the business deal might not be successful, the Chinese would still want to keep that relationship strong for future benefits.
2. Network Your Chinese Business Relation: “Guanxi”
Maintaining good relationships in China would help foreign companies in the China market. The Chinese feel that one needs to be constantly networking in China. In China, establishing relationships with others is referred to as having “Guanxi” with people. Guanxi (relationship) is an important element in achieving successful business in China.
With a good relationship with others, a company would benefit in many different ways. First, a trust between the different parties would have long been established thus the parties would be very comfortable working with each other. Next, if a company would to encounter any problems in any field, knowing someone who is an expert in that field would help explain matters and may even help to resolve any problems.
3. Establish Business Links with Chinese Local Officials
Because the China government plays an important role in influencing market movement and administering foreign investments, a strong government relationship remains an important factor to do business successfully in China. Fewer hiccups may be met during paperwork applications or achieving local authorization if a strong relationship with government officials is in place.
4. Research China Local Markets Competition
Foreign investors also need to find out what their local competitions are. However, one must not overlook small local companies in the China market as the Chinese have a very strong national pride thus they tend to be more supportive towards their local rather than foreign products. Hence, foreign companies would really need to do a detailed market and consumer research if they want to not only enter the China market but also market their products to the local market.
Foreign investors can seek for outside help when trying to enter into the China market. The above are just some of the problems or information of the China market. However, there are many more which most of the foreign investors are unable to handle on their own. Approaching someone who is familiar with the China market and the Chinese culture would help tremendously as they would know the tactic on how to handle any problems.