Ten Tips for Selling B2B in China

TIP #4: DON’T DEPEND ON THE LEGAL SYSTEM YET

Spurred by membership in the WTO, the Chinese government is working rapidly to upgrade the legal system.  Still, the system remains lacking in many areas including qualified professionals to run it.  Protection afforded to individuals and business entities is inconsistent and often biased.  In a legal dispute, the order of favor tends to be 1) Chinese party local to the jurisdiction, 2) Chinese party not local to jurisdiction and 3) foreign party.  The Chinese legal system will eventually align with international practices but it will take some time to do so.  Before doing business in China, you should

·       ensure the maximum negative impact of a deal gone bad is survivable

·       establish possibilities for friendly conflict resolution outside of the courts

·       enlist the support of China knowledgeable legal counsel

TIP #5: SEEK EXPERT ADVICE

Unless you have a lot of time and money, going-it-alone and learning to be effective in China is cost-ineffective.  Seek the assistance of experts that know China and have already done what you are trying to do.  Experts come in many forms including consultants, attorneys, the US Commercial Service, Chambers of Commerce, businesspeople, etc.  You can find many good resources simply by asking around.  Just be sure that whoever you choose to assist actually does have the experience needed.  We hear there are many “China experts” who interestingly enough have never been to China! 

TIP #6: KNOW YOUR STRATEGIC INTENT

Are your selling efforts intended for short-term gain or to build a viable long-term business?  Both can add revenue but the timing for profitability can vary widely.  If your effort is project oriented, you’ll want to earn money on each transaction and may choose to neglect long-term considerations.  If you are seeking to build a business, your commitment and patience must be much greater.  Each step in the market should be scrutinized and critical relationships established and nurtured.  The investments of time and money will be significantly larger before returns are realized.  At some point you’ll need to establish a legal entity and, unless your product is highly differentiated, add value in China to compete with locally available alternatives.  Knowing your strategic intent early will support good planning and decision making each step of the way.

TIP #7: FOCUS ON RELATIONSHIPS 

As westerners, our primary concern is generally the business at hand.  We want to know what the objectives, contractual terms and chances for profitability are.  It’s not a requirement to personally like someone to be able to do business with them so long as there is mutual trust and respect.  This is not so in China where relationship can override the business aspects of a deal.  The Chinese are strongly biased toward doing business with people they like and feel they can trust.  Our pragmatic “get on with the business” approach tends to put the Chinese off.  If you want to do business in China, be prepared to do it differently.  Be patient, adjust your style and spend time relationship building with your Chinese counterparts.

TIP #8: RESPECT CHINA & THE CHINESE

What greater way to respect another country and its people than to learn more about them.  We suggest you spend time understanding the Chinese and their country.  Read some books, have conversations, and do a little research.  It’s work but with every insight gained, you’ll be that much more effective in working with the Chinese.  If you respect their culture, you give them “face” something very important to the Chinese.  Be humble in your approach and your China efforts will progress more smoothly.  If you can’t follow this prescription, that’s OK.  Simply have someone who can take the role of your China lead.

TIP #9: DON’T BE OVERSOLD

You are bound to encounter people who make grandiose claims regarding how they can help you in China.  The motivation is money while the character is one of the following:  1) the overzealous salesman who may or may not be aware he has no chance of achieving what he says he can, and 2) the outright crook who’ll just as soon take your money, clothes and pet canary in the name of greed.  Without talking reasons, a large number of Chinese put the end above the means as they aggressively maneuver for personal gain.  Be wary of those who make it sound to good or too easy to be true.  Do your due diligence and seek out sincere and truly capable Chinese of which there are many as well.

TIP #10: TEAM UP WITH THE RIGHT PEOPLE

Unless you plan to live in China and personally manage your business there, you will have to team up with the right people in order to succeed.  Doing this requires you fully understand your objectives as well as the people who can best help you achieve them.  But know the people needed in a western business environment are different than those needed in China.  Talk to experts before profiling your employees and/or partners and then seeking them out.  Pay close attention to ethical orientation, honesty, stability, communication ability, selling orientation (you need value sellers) and general thinking (e.g. is the person internationalized, etc.) before making commitments.