Though it is difficult to do business in China for a foreign company, some clients still managed to do so and achieved great success in this respect. There are some factors should be considered when you do business in China.
Though it is difficult to do business in China for a foreign company, some clients still managed to do so and achieved great success in this respect. There are some factors should be considered when you do business in China.
Understanding is definitely a recurrent theme in a successful JV in China. Understanding the way PRC bureaucracy works is a pre-requisite. It is very important that an investor understands where authority is vested at central, provincial, and municipal levels, so that they can obtain the requisite approvals and chops (official seals) to set up a JV. You should also know the level of any particular individual with whom you are dealing so you will not embarrass him or her by asking questions that are beyond their responsibility or control that may lead your request being subsequently refused.
Understanding between the foreign investor and the Chinese party is of equal importance. In establishing or managing a JV, you can never make assumptions or expect something will happen. Sometimes, Chinese partners complain about the price of technology, expatriates etc. and at other times, they will question your motivation in retaining or injecting funds as working capital into the JV. On these occasions, you must make every effort to enhance the understanding between each other and to show them that what you are doing can add value to the business, therefore make them realize that long-term commitments and cooperation is the only way to make the business grow.
An understanding of the business environment will also enable foreign investors to focus on the introduction into the JV of such things as reward systems, for example, offering production bonuses or provide training program for both locals and expatriates employees to further develop their work skills. Where foreign investors manage to convince workers from the state-owned factories system to be loyal to the JV has generally been the first large step to a successful JV.
Great patience is required to build up the necessary level of trust and you mustn't rush it, particularly when you are trying to acquire a substantial interest in a state-controlled industry. Remember the more patient you are, the more understanding you can achieve in the end.