Do Business in China
Why do we want to do business in China? The answer is simple. We are still in a recession, and our unemployment rate is high. We have to explore alterative market to make money. What makes China an attractive market? China is attractive because there is big money to be made.
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Figure 1 Comparing Population of US and China in Millions
China is the second largest economy in the world (Barboza, 2010) with 1.3 billion in population. That is more than four times the U.S. population. (Figure 1)
According to the World Bank, GDP per capita of China increase 25% between 2010 and 2011; that of US only grew less than 5% during the same period. Therefore, China is an attractive market to do business. (The World Bank, 2013)
Challenges in China
Doing business in China is different from doing business in western countries. Based on my experience, there are three major challenges.
1. Business Culture
“Culture is King”, says Normberg (2013) on rules for doing business overseas. In China, “face” and “guan xi” are two important concepts to master. For example, Chinese people highly appreciate gift from a high level company extinctive. This attention builds “face” (Kermeliotis, 2011). In time, this builds “guan xi”, which are long-term relationships. It is about whom you know, not what you know. (Collins, 2007, p277-278) If you have a good business network, everything will go more smoothly.
In addition, most Chinese have a difference view on intellectual property. Once a product is made public, they think it is free to copy. So, copyright is an issue that needs to be address.
2. Economy
Nowadays, average Chinese living standard is much higher than that of 10, 20 years ago. Chinese customers desire higher quality goods and services. They are willing to pay high prices. Such willing customer creates intensive competition among local and foreign plays alike.
On the other hand, Chinese
[pic]
Figure 1 Comparing Population of US and China in Millions
China is the second largest economy in the world (Barboza, 2010) with 1.3 billion in population. That is more than four times the U.S. population. (Figure 1)
According to the World Bank, GDP per capita of China increase 25% between 2010 and 2011; that of US only grew less than 5% during the same period. Therefore, China is an attractive market to do business. (The World Bank, 2013)
Challenges in China
Doing business in China is different from doing business in western countries. Based on my experience, there are three major challenges.
1. Business Culture
“Culture is King”, says Normberg (2013) on rules for doing business overseas. In China, “face” and “guan xi” are two important concepts to master. For example, Chinese people highly appreciate gift from a high level company extinctive. This attention builds “face” (Kermeliotis, 2011). In time, this builds “guan xi”, which are long-term relationships. It is about whom you know, not what you know. (Collins, 2007, p277-278) If you have a good business network, everything will go more smoothly.
In addition, most Chinese have a difference view on intellectual property. Once a product is made public, they think it is free to copy. So, copyright is an issue that needs to be address.
2. Economy
Nowadays, average Chinese living standard is much higher than that of 10, 20 years ago. Chinese customers desire higher quality goods and services. They are willing to pay high prices. Such willing customer creates intensive competition among local and foreign plays alike.
On the other hand, Chinese
References: Barboza, David. (2010). China passes Japan as second-largest economy. Retrieved from http://www.nytimes.com Collins, R., & Block, C Fairton. (2013). Company background. Retrieved from June 22, 2013, from: http://www.fairton.com Flannery, Russell IBS Center for Management Research. (2006). P&G’s Success story in China. Retrieved from http://www.icmrindia.org Kermeliotis, Teo Normberg, M., Vanessa. (2013). 3 Rules for doing business overseas. Retrieved from http://www.inc.com The World Bank ----------------------- [1] www.icmrindia.org, 2006 [2] Flannery, Russell, 2012 [3] www.fairton.com, 2013