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Understanding China Ben Newman Beijing Consulting Group
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Understanding China
Ben Newman Beijing Consulting Group
Understanding China
Introduction
China in Numbers
Doing Business in China
Culture in Business (Business in Culture)
China: Interesting Facts
China produces 66% of the world's garlic.
400 different varieties of kiwi fruit in China (used for
over 700 years)
KFC first translated its advertising slogan "finger lickin'
good" into Chinese, it came out as "eat your fingers
off".
35 children are born every minute in China.
About 700,000 engineers graduate annually
42,000 characters in Chinese language. An adult is
only expected to know 5,000 of them.
Ost trifft West
刘杨 Yang Liu
Graphic Designer
Born in Beijing, 1976.
Moved to Germany in 1990.
“I am very German in my approach to work. But when it comes to emotional decisions and human interaction, I am more Chinese.”
Cultural Impressions
Me
Lifestyle
7
Daily Meals
Transport
Children
Queues
11
Parties
12
In a Restaurant
13
Travelling
China in Numbers
1 BILLION consumers by 2030 as urbanisation continues
500,000,000 lifted out of
poverty since 1985
‘Workshop of the World’
Changing of the Times
Economic Transition
Open
Economy
Market
Economy
Urban
Closed
Economy
Planned
Economy
Rural
Source: http://news.sohu.com/20120823/n351314404.shtml
China’s ODI
7 Strategic Industries
From Low-End Manufacturing to High-End, Services and Infrastructure
China Inward FDI (2014) ● Energy conservation and environmental protection
● Next generation IT
● Biotechnology
● High-end equipment manufacturing
● New energy
● New materials
● Clean energy vehicles
FDI in China
56% 33%
11%
Services
Manufacturing
Other
FDI TREND
Joint Ventures PREFERRED TO TRANSFER
TECHNOLOGY & KNOWLEDGE
STRONG INFLUX OF
Foreign Experts TO DRIVE QUALITY, SAFETY
AND PRODUCTIVITY
Changing Face of EXPATRIATES MORE LOCAL HIRES
SINGLES NATIONALISING OF
MANAGERS Construction OF OFFICES IN CHINA
DIFFICULT TO ATTRACT & RETAIN STAFF IN 2ND &
3RD TIER CITIES
1,200 R&D Centres set up in China by
Foreign Companies
Overseas Companies
Moving Inland Or To Remote Locations
INDUSTRIES FDI GROWTH 2011
INCREASED
STRENGTH &THREAT
OF Chinese COMPETITORS
Lack OF INTELLECTUAL
PROPERTY
PROTECTION
HIGH INFLATION, RISING LABOUR &
Raw Material COSTS
HEALTH RISKS
POLLUTION PANDEMICS
Food Safety
CONSTANTLY
Changing Regulations, LICENCING & LEGAL
ENVIRONMENT
Overseas Companies
Doing Business in
China
Numbers vs. Reality
“If Only Every Chinese Person
Bought One Bottle of My Beer …”
China is not ONE big market
Sum of many mini-markets
(geography, language, social
background, finances and culture).
China: One Country?
4 Municipalities
23 Provinces & Municipilaties
5 Autonomous Regions
2 Special Administrative Regions (SAR)
China: One Country?
North East China (3 provinces)
East China (10 provinces/municipalities)
Central China (6 provinces)
West China (13 provinces/municipalities/autonomous regions )
SAR (2)
North East China (3 provinces)
East China
(10
provinces)
Central China (6 provinces)
West China
(13 provinces)
Business in China:
Opportunities
Urbanization and Mobility
Wealth
Consumer Sophistication
Use of Internet
Services Sector
Growing …
[Source: CBBC, Leeds University, UKTI]
Challenges
Challenges
With time and patience the mulberry leaf becomes a silk gown.
- Chinese proverb
Challenges
Operating Practices
Unfamiliarity
Intense Competition
Scale/Pace of Change
Different Cost base
Steep Learning Curve - Unforgiving
Regulations/Bureaucracy
Strategic Plan
Decide Entry Strategy
Understand Government
Prepare for Culture Gap
Importance of relationships NOT contracts
Understand legal system and IPR
Find the right local partner
Be flexible and adapt
Expect delayed pay-off
Business in China:
Success Factors
Culture in Business (Business in Culture)
33
Punctuality
34
Contacts
35
Annoyance
36
Opinions
37
Solving Problems
38
The Boss
Influences
Chinese Culture
History Women Elders
Language Education Confucius
Family Zhongguo Patriotism
Behaviours
Chinese Culture
Patience Group Hierarchy
Guanxi Modesty Decisions
Bonding Face Contracts
• Too much concern for environment
and safety
• Too honest
Chinese View:
Overseas Staff
Equality
Safety
Systematic
Individualism
Rigid
Superior
• Good at planning and filing
• Family before work
• Poor reaction to change
• Lack of trust
Common Mistakes
Ill-prepared
Interpreter
Focus on protocols and not matter at hand
Believe words at face value
Over-reliance on “guanxi”
No person-to-person links
Losing temper
Rules & Relationships
Universal and clear Not universal and
often unclear
Binding and
detailed contract
Contract can be
changed
Focus on fairness Focus on
relationships
Rules & Relationships
How can I trust
the Chinese?
They always
help their
friends
How can I trust
Westerners?
They don’t
even help their
friends
关系 Guanxi
2 Way Street
What is it?
Built Over Time Not Free or Unlimited
Comfort Zone
Important?
Need Verification Bonus vs. replacement
Care
How to …
Frequent Contact Walk a mile … Investment
Negotiation: Techniques
Legal firm with presence in China
Independent Advice
Intellectual Property - advice
Halve expectations, double budget
Grey issues
Be firm, creative
Be prepared to say no
Business Etiquette
Good business relationships and trust
Business meetings start promptly - senior person first. Handshake
Business cards essential
Simple Mandarin phrases
Never begin eating or drinking until you host does
Dinner speeches and frequent toasts are standard;
Remain patient and polite.
Speak in short, simple, and jargon-free sentences.
Trust
Handshake
Business cards
Basic Mandarin Phrases
Host begins a meal – toasts, speeches
Patience
Summary: Profile for Success
Leave your preconceptions at home;
Keep hold of your business sense;
Do your homework;
Patience is a virtue;
Long-term approach;
Be flexible;
Quality independent legal/professional advice;
Specialist legal advice on IPR:
Due diligence;
Remember personal relationships.
谢谢 Thank You!
Beijing Suite 1206, Zhubang Office
98 Bali Zhuang Xili Chaoyang District
Beijing 100025 China Tel: +86 (0)10 85866220/6386/6387
Fax: +86 (0)10 8586 6221
Shanghai Tel: +86 (0)21 6445 4879
Fax: +86 (0)21 6445 4976
[email protected] www.bjconsultinggroup.com
