Mistake #8- Local Professionals
Because of China’s outdated accounting system, bureaucratic controls, lack of legal transparency and its ever changing laws and national and local regulations, sound professional advice is an essential prerequisite to establishing a business presence in China.
Your network of professionals must be identified and selected before you consider establishing your business in China.
A key preliminary decision is how to select your professional team in China. It is easy to hire a local professional – China now offers a wider range of professional services than ever before: accountants, lawyers, business entry and HR consultants, as well as sales, marketing and public relation professionals.
However, the China professional services market is fraught with potential pitfalls and problems.
While fraud is as common in China as it is anywhere else, you have to be aware of a few local characteristics that may complicate your business in China, such as the low level of IP consciousness among Chinese citizens and employees.
Incompetence and inexperience are just as dangerous to you as dishonesty. Providing professional services for foreign investors is a booming industry in China. That means it looks like easy money to lots of young inexperienced university graduates. You need help to find the right mix of education and experience in your professional advisors.
Getting what you ask for is a huge challenge in China. Don’t assume anyone will tell you if your goals or standards are not possible. Many inexperienced local professionals will not understand your quality requirements and will provide services they feel are “just as good”.
You and your local professionals may have different agendas. For example, many business entry consultants are really nothing more than shills for their friends and “connections” with expensive services and business solutions to sell you. Your business entry consultant needs to provide you with value-added advice and planning assistance.
You should only hire local professionals if they have the “connections” you need and the soft-skills you want. However, before you use local professional services, we recommend you carefully check every representation made by them to you.
International experience is absolutely essential. Make sure the local professionals you are speaking with have the international experience, not the firm he works or previously worked for. Be specific in your questions and make sure you are satisfied with and understand each answer.
Traditional Chinese businesspeople don’t see any virtue in specialization. Many professionals in China won’t say “no” to an opportunity, regardless of their ability to competently do the required work. Instead, they’ll learn by doing based on their theory, whatever mistakes they make will help them in the future. You, however, will pay the price for their education.
Judge a professional by his proposed solution to your problem. Make sure they are providing value-added answers. Find a specialist who has handled the specific transaction for which you need professional assistance.
Be very clear who is doing the work. Don’t be afraid to ask “naive” questions like “do you have the staff who can do what you say they can?”
When dealing with local professionals, references are extremely important. Make sure you are getting current, actual references from clients who have used the professionals to provide them the same professional services you require. Find out who the partners in the professional firm are and what they’ll be doing for you. Find out the transactions that were completed by the firm not just people the partners have worked with on a previous transaction. Call past clients and make sure that the firm actually worked on the specific transactions and provided the professional services they say they provided to the references.
Once you have identified and selected your team of local professionals, you cannot just sit back and let them take care of your business. Operating a business in China requires much more rigorous management than is required in North America.
One basic approach to managing your team of qualified local professionals in China is to hire a lead consultant to act as the project manager for the team. An expatriate operated consulting firm catering to the international market is usually the best choice for this job. By directly working with them, you will get the skills, talent, and communication you receive in North America. They usually understand China in the way you need to understand China from an international business perspective. They have proven experience in China and market-specific knowledge. They definitely understand your requirements, and will manage your team of professionals and your business in a way that makes sense to you, at a level of quality you are accustomed to.
Take-away lesson: local professionals in China can be helpful, but you need foreign-run consultants to help you locate and manage those qualified local professionals.
