Campbell Naish (left) and Chris Boys.
China is an enormous market with many layers. Like all markets China has culture and business characteristics that are unique but they also have many similar motivations to business markets worldwide.
Identifying and seizing quality business opportunities in China requires a commitment to understanding the market environment and becoming familiar with how to do business in China. Key considerations for those going into the market include:
1. Find your niche.
China is a collection of many markets defined by culture, language, geography, demographics, local government, developmental stage and numerous other factors at a micro level. China is made up of cultural regions, megacities and second and third tier markets which all provide unique opportunities and require different approaches.
Clearly define a target market of a realistic scale where you have identified a distinct opportunity. Large differences exist between markets and care must be taken to identify the market or markets that offer the greatest opportunities for your business.
2. Find the right partner.
Spend time understanding the market. Learn who the end user of your product or service will be and how you can get as close to them in the supply chain as possible. Relationships are extremely important and require considerable effort to establish, maintain and grow. The sincerity of relationships formed with the right local partners has a major influence on a company's ability to succeed in China. Identify firms and individuals that can provide the assistance and networks needed to access the market being targeted. Avoid wasting resources on relationships that do not justify the investment of time and effort required to maintain them.
Choosing the right distribution partner on the ground in China will be a critical factor in your success. We recommend using a competitive selection process. It’s important that key performance indicators are agreed at the outset and then measured, monitored and reviewed on a regular basis to ensure objectives are being met, opportunities identified and obstacles addressed before they become problems.
3. Put time into developing the market.
Patience is essential when entering Chinese markets. Whether identifying the right distributor, going through the registration process or concluding a deal, things will take longer than expected.
Remember as New Zealand businesses are assessing potential partners their Chinese counterparts are doing the same thing and they know less about New Zealand and have their own sterotypes about us – so building trusting relationships over time is an essential step leading to successful partnerships.
4. How do I relate?
Though clear differences exist between China and New Zealand on a number of levels, the similarities are many. Shared values based around national identity, family, friendship and the desire to prosper through business provide common ground on which to form bonds.
Focus on commonalities and demonstrate understanding of their culture as a basis for building and strengthening relationships.
5. Understand Chinese business etiquette and cultural perspective.
Understanding formal and cultural aspects of etiquette is vital. From business cards and business attire to understanding the significance of social occasions in the non-stop world of Chinese business, every aspect will inform prospective partners’ assessment of you as a business partner.
Be well prepared with agendas for your meetings prior to heading to China. Arrange meetings one or two months in advance and be punctual. Pay genuine respect to protocol and tradition and accept contradictions and last-minute changes without frustration. These are an expected and accepted part of doing business in China
6. Communicate effectively.
Ensuring mutual understanding of negotiations and agreements provides the bedrock for prosperous long term relationships. Invest in ensuring you and your partner are clear about intentions, objectives and expectations.
Use translators for accurate understanding during discussions. Never assume there is mutual understanding. Leave nothing to doubt, interpretation or speculation. Clearly summarise understandings and expectations in writing before progressing to next steps.
7. Allocating time when visiting China.
Business is a lifestyle in China so embrace the 24/7 culture. Be prepared to meet business associates in social settings on evenings and weekends.
Chinese separate business and socialising, so dinners are not the place to do business deals. However, if a deal is done it is at the end of the meal, after a few drinks so keep your wits around you.
8. Understand contracts.
On a business level, basic principles of due diligence apply to China as to any other market.
Conduct thorough research on all aspects of a prospective partnership or deal and act accordingly. Be aware that while a contract is a commitment to a relationship Chinese partners will react to their market situation and order accordingly.
9. Working with the Chinese Government?
Government and the Communist Party play key roles in all aspects of Chinese life. Though private enterprise thrives, official connections are essential to business success.
Try to gain an understanding of how the national and local governments are structured so you are aware of who are dealing with and the roles that they play. Look to leverage national and local government relationships to enhance credibility and status. Having local partners will make a big difference.
10. Finding customers to buy products.
Not understanding the relevance of your offer in China is a sure fire way to stall at the start line when looking to enter the market. Purchasing and usage behaviours need to be understood to confirm if your offer fits with the local cultural norms.
When it comes to taste, colour, aroma, texture, appearance and sounds then something as simple as apple juice has a need to be adapted to appear to local consumers on an ongoing basis. So to be relevant ensure you understand the exact context your product will be sold in and that it is market ready.
11. Will I be successful?
Despite the considerable opportunities presented by China's sizeable and rapidly growing market, like any market success relies on having a clear opportunity, doing robust due diligence prior to market entry and working hard to ensure that your offer remains in market after entry.
Draw on the experience of those who have achieved success and avoid going it alone. Local support is key and advice should be sought at all stages of the process.
Katabolt is an international export consultancy helping Kiwi companies enter offshore markets and achieve results faster and more efficiently.