Mistake #6- Learn the Market
China’s language, culture, and distance all make it seem very alien to most people. Many people have also heard that the country is an extremely difficult place in which to do business.
The simple response to these concerns is you should never make generalizations about nor leap to conclusions regarding China. More often than not it is as easy to conduct business in China as it is anywhere else. If you invest time and effort to learn the culture and language, you will be rewarded many times over.
The most important prerequisite to doing business in China is to be prepared. Read up on the country. Spend time conducting market research. Know who you are meeting. Take an interest in the cultural and social factors that influence business decisions in China.
Most Chinese people attach great importance to cultivating, maintaining, and developing connections (guanxi) and are highly sensitive to face (mianzi) These social values, which are the keys for understanding Chinese social behavioral patterns and business dynamics, are shared by Chinese living not only in the PRC but also by those living in Taiwan, Hong Kong and in overseas Chinese societies all over the world.
However, it is essential for you to understand the geographic and ethnic diversity in China in order to avoid creating or strengthening the stereotypes of China. It is important to understand that not all Chinese are alike or eat the same food or talk the same way, or even think the same. From Harbin in China’s Northeast, to subtropical Haikou on Hainan Island in the South China Sea, China encompasses diverse topographies, climates, cultures, and people. Each region therefore has its own business culture and etiquette, consumer preferences and business needs. Throughout history, Chinese businesspeople from different regions have exhibited distinct characteristics. These distinctions have reemerged or evolved into features that have differentiated one region’s businesspeople from another’s and even contributed to the formation of unique competitive advantages.
Furthermore, although China has a strong central government and laws and regulations are similar throughout China, there exist significant differences in local government effectiveness. Some local governments are more efficient, disciplined, transparent, accountable, and have a rule-based mentality. Also, local governments are aggressively competing for foreign investment to generate local jobs and tax revenue. They offer different benefits regarding tax abatement, and use costs, infrastructure support, and so on. So you may also wish to check the reputation of, and the proffered benefits provided by, local governments before committing to a particular locale.
It is interesting that many of the teachings of how to do business in/with China tend to start or end up with listing out some stereotyped cultural tips and types, and our response towards it is that it is really inadequate. We do believe that cultural awareness contributes to business success. The stereotyped cultural tips, however, could be very misleading when delivered in an over-generalized approach or taken with an over-simplified manner without better and live understanding of the specific situation of China. The speed of change, the scope of the land, the complexity of systems, the span of history, the diversity of local cultures, the varied levels of educational development in different localities, and the gaps in economic development among areas would all affect business developments and successes, either domestic or international.
Take-away lessons: (1) invest some time and effort to learn the market in China, but do not make generalizations about China; (2) understand businesspeople from different regions of China may do business very differently; (3) do not rely on cultural tips too much: (4) cultural knowledge will not guarantee a success, but rather, it is a plus.
