6 Cultural Differences in Business Between the West and China

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China is no longer just the world’s factory. Chinese have a greater purchasing power than before, therefore, a growing number of foreign companies do business with China and its enterprises. However, there are a lot of cultural differences between the west and China in the way business is conducted. Therefore, it is valuable to develop insights into China’s business culture and etiquette to avoid misunderstandings that could scuttle deals and harm business relationships.

Here are six aspects of business cultural differences you must know when doing business in China.

1. The Importance of Mianzi (face)

Face is an essential component of the Chinese culture. Face is considered to be a mix of public perception, social role and self-esteem. It is very visible in the Chinese business environment, and has the potential to either destroy or help build relationships. Having face means having a high status in the eyes of one’s peers, and is a mark of personal dignity.

Causing someone to lose face could ruin business prospects. The easiest way to cause someone to lose face is to insult, criticize or shout at him/her in front of others. Just as face can be lost, it can also be given by praising someone in front of others. Giving face earns respect and loyalty. The Chinese are acutely sensitive to gaining and maintaining face in all aspects of social and business life. Losing face should be avoided during all times.

2. The Importance of Guanxi (Relationships)

Building relationships is the best way to overcome many of the obstacles to doing business in China. In a highly competitive business environment, it is more important than ever for you to understand the business relationships of your target markets. Building a strong relationship is just as important as writing a good contract. In business, relationships are two-way, and must be maintained through regular contact. The more you share your personal life, including family, hobbies, political views, aspirations, the closer you are in your business relationships which are essentially based on mutual interests and benefits. The things Chinese often do in life and business, such as eating, drinking or entertainment with others, are actually building relationships with others. So after a while, Chinese business relationships inevitably become social relationships.

Among all the business culture, the above two points are placed great importance on. And all the points listed below are based on and rotate around them.

3. Greetings with Chinese

Instead of addressing people by Mr. or Mrs. plus their family names in foreign countries, Chinese are usually addressed by their title in an organization plus their family name, for example, Director Li. But remember that traditional Chinese family names are placed first with the given names (which has one or two syllables) coming last (family name: Wang; given: Gang), which is opposite to foreign names. If a person does not have a professional title, use Mr, Madame or Miss, plus the family name. For people meeting for the first time, shaking hands is common, but wait for your Chinese counterpart to initiate the gesture.

Another point requiring your attention is that hierarchy is important to Chinese. So no matter greeting or shaking hands, make sure greet and shake hands with the most powerful person before others. When giving out your name card, please start with the most senior person before moving down the line. It is better to have your name card translated into Chinese on one side. And use your both hands when giving out and receiving name cards.

If you don’t know who is the most senior person in the room, it is a good idea to discover this by asking about the relative roles of those present in the organization, and then address that person.

4. Conversation with Chinese

Starting a conversation before a meeting could break awkward and help build your relationships with your newly met business partner. The small talk before a conference will influence the first impression of you, so try to avoid the awkward topics, and start with an easy question that doesn’t have too much significance or sensitivity, such as hobbies, weather, your hometown, the Chinese landscape and Chinese culture. Sometimes Chinese may ask apparently embarrassed questions, such as your age, income or marital status. These questions are not meant to offend. If you don’t want to answer, remain polite and give an unspecific response, but do not lose your temper which will cause both you and your Chinese counterpart losing face.

5. Business meeting with Chinese

Confirm with your Chinese counterpart the date and time of the meeting. Don’t be late. And it is safe to dress formally. If possible, get a list of attendees and their ranks so that you will know who is the senior person. Prepare detailed materials of your product or service to capture the attention of the senior person who is often the decision maker. To accelerate your deals with Chinese, an interpreter and materials written in Chinese language are helpful in case the Chinese side, particularly the decision maker has little English capability. Don’t be impatient about the contract signing. Chinese often need time to build up relationships or trust prior to business decisions.

6. After-work Activities of Chinese

Unlike the belief in the West that one should not mix business with personal life, in China, business relationships have a much more intimate and personal meaning. Therefore, after-work activities are considered necessary and important to build and strengthen a sincere business relationship. Usually, the common after-work activity is banquet. Sometimes, a trip is made to the restaurant even before any business discussion takes place! There are many things to be noticed when dining with Chinese.

Dinning etiquette: The seating arrangement is one of the most important parts of Chinese dining etiquette. Usually Chinese are seated according to seniority, and your host will also assign a seat to you. It is often to his left-hand side (the number 2 position in the hierarchy). This is a very important aspect of a formal dinner and it is important that you follow the rules accordingly. In addition, don’t forget to compliment your host on foods he or she arranged, for it will give him/her face and it shows you appreciate local Chinese food.

Drinking etiquette: Indeed, the more you can drink, the more respect or face you will receive in China. And remember: don’t refuse a drink that is offered to you unless you have a valid reason. If you do not want to drink anymore, you can simply swap the drink with a non-alcoholic liquid or quietly dispose of its content. But not accepting a drink (without a proper excuse) is considered to be rude. And it will make your host lose face which should be avoided.

China is becoming one of the biggest markets in the world, so knowing these business cultural differences will definitely help when dealing with Chinese customers or distributors! Don’t hesitate to contact Jingle Office if you need any further information or assistance.

Related reading: Top 6 Secrets of Making A Successful Business Negotiation with Chinese

6 Keys to Start Your China Ecommerce Business

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China has become the leading emerging market for many Western brands and retailers. For many businesses, the growing spending power of high-income consumers and the middle class in China has become a compelling growth engine. For luxury brands, China is already a huge growth market. As the economy grows in China and consumer thirst for foreign brands increases, companies will be compelled to consider an online direct-to-consumer presence due in-part to the following factors:

The scope of the Chinese market is immense. China Ecommerce presents an important way to reach consumers across the entire country while complementing any decision to invest in core physical retail operations. China Ecommerce is growing very quickly. In 2015, online spending in China grows to $2.43 trillion.

The Chinese consumers’ strong appetite for foreign brands. One of the key reasons why Chinese consumers prefer foreign brands is actually quality. And while Chinese products will likely improve in quality over time, there is a sense that Western brands must have a sense of urgency and move now to win the hearts and minds of Chinese consumers.

Based on the above reasons, starting your China ecommerce allows no delay. Jingle Office has summarized the ways to help you start your China ecommerce.

#1 Market Research

Before starting an China ecommerce business, you must check if your brand name has been trademarked, as this could radically affect your plans. One must also be aware of the competition present in the market that you are targeting. Look to see who is “winning the game” in your sector right now. Your competitors may have the market sewn up and it becomes a battle for market share. There are other barriers to overcome too, such as paperwork and licenses, including ones for imported goods, which need to be completed before you can do business in China. Most importantly, you must segment the market, target a certain client base with similar characteristics and then position your brand to tie in with the targeted customer base.

#2 Choose Your Store

You have two choices to start your ecommerce in China: your own stand-alone ecommerce presence, or online shop on popular ecommerce platforms.

1. A stand-alone ecommerce website

A stand-alone ecommerce presence allows better control for online-to-offline strategies, new product inventories (vs new products to be approved by the marketplace, which can be a lengthy process) and design flexibility. However, launching a stand alone ecommerce is not without its challenges in China.

Payment gateways: Chinese use different payment methods from foreigners. The preference of Alipay or WeChat Pay over PayPal in China is due to the number of free functions offered to account holders, such as buying bus tickets, topping up mobile credit and paying for products in-store, to name a few.

Hosting and loading speed: Depending on your target market, businesses need to be selective which web host is best for you. Hosting a European based website while your target market is in China will cause access issues, ranging from lengthy loading time to ultimately poor user experience.

ICP: Obtaining an ICP license is mandatory if you want to operate a website in China. Your ecommerce website will be shut down by Chinese government without this license.

2. An online shop on popular ecommerce platforms

There are many ecommerce platforms in China. Tmall and JD (JingDong) are China’s most popular B2C platforms. Both are comprehensive platforms. There are some documents, including your business license and some certifications, required when you register a shop on the platforms.

WeChat is an extra channel given the fact there are over 697 Million active WeChat users in China. Social media play a significant role in Chinese ecommerce, which already makes up 40 percent of the total Chinese e-commerce turnover.

And there are other ecommerce platforms in China, for example, JUMEI, VIP, Suning, etc. According to your product or service, you can choose one or more platforms. If you are in the cosmetic line, JUMEI is a good choice. If you are in the fashion line, you can choose VIP to start. It is common for foreign companies to choose more platforms. Blackmores, an Australia company, establishes its cooperative relationships with several ecommerce platforms.

When you choose your ecommerce platform, it is better to assess it. Get detailed information about its target customers, focus categories, logistics, how long it has been running, other cooperative foreign brands, and so on.

#3 Write a Business Plan

For any company, no matter it is foreign or domestic, large or small, the importance of a business plan is undoubtedly great. You have to set up your ecommerce business plan as clear and specific as possible. It should cover your ecommerce model, sales goal, revenues goal, marketing strategy, marketing budget, pricing strategy, promotion campaign, and so on. It is a really important because the layout and infrastructure of an ecommerce site will be the difference between customers buying your product/service and browsing elsewhere. It’s no use rushing your website as it will only hinder you in the long run.

#4 Find a Partner

It will be much easier to enter China if you find a right partner to cooperate. Local native-speaking implementation partners are familiar with all cultural, technical, legal, political and governmental issues. They can help you to work out the political and legal issue (e.g. Chinese business license) at the early stage when you plan to enter Chinese market, and can offer you the most effective solutions for product localization and other problems.

There are several ways of finding partners in China. It pays to take your time to select a partner right for you.

#5 Product Localization

Localization is perhaps where most foreign companies lose out in China. Localizing in China can even mean discarding a business practice model that has been successful in other Asian countries like Singapore and Japan. Top executives from home-base are not going to win a local fight.

Don’t try to force your foreign product or message onto the Chinese market. Customize your brand face – your packaging and your website – and do it with your competition in mind. Some foreign companies failed in China because they jumped the gun – launching before their China face is ready.

When localizing your website, you need to find the balance between your company culture and local culture. Pay attention to user interface design and user experience design. Another point on website localization is the quality of translation. Some try to cheat on the translation, using services like Google Translate. That’s really silly, as Google doesn’t work well in China and the translation is very poor. Quality translation is essential.

And don’t forget to localize your payment method. The financial industry is protected by Chinese government. Most Chinese customers only have domestic bank account and third part payment account. Alipay occupies half of the market so far. Pay by delivery is also acceptable, which is still widely used in Chinese ecommerce.

#6 Website Promotion

For foreign companies launching their ecommerce business in China, website promotion is important for them to strengthen their brand awareness and stand out from the competition, especially for the brands that Chinese are unfamiliar with.

First, carefully design your website, no matter you are a stand-alone ecommerce website or a shop on ecommerce platforms. Offer friendly user interface design and user experience design. The information displayed on the website should be as clear and detailed as possible in order to make Chinese customers understand product functions, usages and appearances. It is better to show some pictures of both product and package. Feedback and reviews are also important. For some customers who are not sure whether to buy, reviews from other customers become a crucial factor. So encourage customers to make feedback and reviews on your product. All of these mentioned above can drive your website clicks and orders.

Besides, search engine optimization is always important. As in all markets nowadays, you need to run campaigns and search engine marketing to drive traffic to your website. The search giant in China is Baidu rather than Google. You have to remember that search in Chinese is different from search in English. Besides that, you can also choose an affiliate service, such as Alimama; Baidu PPC; and social media marketing (for example, Weibo and WeChat).

For Western retailers, you could consider integrating with a local Content Delivery Network (CDN) such as China Cache or gaining a thorough understanding of local caching rules. Knowing when and how to distribute content across a CDN is also critical.

Finally, for Chinese customers, tablets and phone are playing an increasingly important role in online shopping. Nearly half of all China’s ecommerce sales, totaling $505.7 billion, are made with mobile devices. If you aren’t building ecommerce businesses with mobile in mind, you may be irrelevant in three to five years.

The cost of gaining eyeballs for your product and website is high, but indispensable. So make it in your business plan, and make sure your company has the financial capacity needed to go through the Chinese marketing development period until your product gains sales momentum.

Related reading: 8 Effective China Digital Marketing Strategies

Top 6 Secrets of Making A Successful Business Negotiation with Chinese

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Nowadays, the opportunities in China are too great for foreign companies to ignore. However, every potential opportunity accompanies with commensurate challenge, especially for the small companies that lack resource and brand awareness in China. Due to nuanced cultural and language differences, small companies often feel confused when coming to Business Negotiation with Chinese.

Here are six things that deserve your attention and preparation before your Business Negotiation with Chinese.

1. Prepare for a long haul.

Business negotiation with Chinese are all about building relationships. That means your potential partners will expect to spend time getting to know you before they’re willing to talk business. You’ll probably need to meet in their offices while you introduce your company and form a bond of trust. Then, let Chinese side initiates when it’s time to start serious discussions.

2. Find your own interpreter.

Unless you and your counterpart speak the same language, you’ll need to hire an interpreter. But don’t use someone supplied by the other side; you want a person who’s on your team, able and willing to help with the nuances of the language and culture. There is a frequent problem: U.S. businesspeople unknowingly say things that can be construed as inappropriate to the Chinese. Your interpreter would translate the essence of your statement in such a way that it wouldn’t be offensive, but their person might translate exactly what you said.

Your interpreter also can help decipher the nuances of the conversation. For example, it’s likely your Chinese counterparts will avoid saying “no” directly. The translator can explain whether “It’s difficult” means what it sounds like or is an indirect form of “Forget it.”

3. Form a plan and a team.

Before beginning negotiations, you need to pinpoint exactly what you have to discuss and the minimum you can accept. While that’s true for any negotiation, it’s especially important for China, where you’ll face significant language and cultural differences. Your plan should include everything from who pays for shipping and who owns the goods to the method of payment. A key decision: at what point you lock in the currency value you’ll use, since it fluctuates. You might decide on the value of the dollar on the day of shipment, for example, or at the time of the negotiation.

Also, make sure you’ve assembled a team of people who can attend negotiations with you. That should include a local representative who can act on your behalf, making introductions and working with potential partners. You can find such a person through the relevant department of your country.

4. A banker is also key.

Before you leave for China, in fact, it’s best to meet with your bank in your country and ask to be connected to its financial representative in China. Then you can arrange to meet that person as soon as possible once you arrive, and for him or her to take part in negotiations. If financial issues are discussed, your financial representative will help a lot. And if there is any inappropriate for your company, you will learn that and take care of it right then and there.

5. Expect a different view of what a contract is.

For Chinese, the contract is the beginning, not the end, of the discussion. It is to say: you just agree to certain terms in a contract, but it doesn’t mean it will really happen.

It’s likely the Chinese side will continue to make many changes up until the time a product is delivered. For that reason, build into your own planning the distinct possibility, for example, that goods might not be shipped on the date you think you’ve agreed to.

In addition, once the contract is signed, make sure to stay in touch so you know what’s really happening with your order.

6. Pay attention to rank.

For Chinese, one’s position in a hierarchy is viewed as crucial. Therefore, you may be addressed by your title rather than by name. You need to do the same in return.

What’s more, you’ll be expected to have people of the same rank as your Chinese counterparts participate in negotiations. If lower-level representatives of the other side take part in the discussion, assume they don’t have the final say. You might think something has been decided, but those people are going to go back and get approval from someone else.

Related reading: 5 Useful Tactics of Doing Business with Chinese

7 Insights into International Brands Entering China Retail Market

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There are a lot of analyses, largely correct, discussing on what makes it complicated for foreign brands to enter China Retail Market. More offen than not, the basic cause points to the vastness and complexity of China Retail Market, as well as the diversity of its cities and provincial economies.

China, as a market, is more like a Europe Union than a single country. While economic growth and the benefits of globalization unevenly influence Chinese cities, it is no surprise that there are a lot differences between the retail markets in different regions. Therefore, it is wise for the foreign brands to carefully design your entry strategies before entering China Retail Market. The following research may shed some insights into your brand entering China retail market.

The research aims to answer the following questions by dividing China cities into four tiers.

1. Where are the consumers that buy foreign brands?
2. Is there any difference in the buying behavior between male and female?
3. What is the top criterion for consumer retail purchases in China?
4. How loyal are the Chinese consumers to the brand they buy?
5. How ready are the Chinese consumers to accept new brand and concept?
6. What premium are the Chinese willing to pay for abstract concepts such as low carbon or organic as product attributes?
7. Geographically, which city should be the entry location for a foreign brand?

China is not a single market; instead, it is large and diverse. It can be segmented from geographic, cultural and social economic angle. For the convenience of research, it is segmented according to administrative units: in the first tier cities, the largest cities in China, Shanghai is selected; in the second tier, Chengdu, Jinan and Hefei are selected; Zhongshan and Xiangfan are chosen for the representatives for the third tier; Changshu and Xinmin are chosen for the fourth tier. Geographically, the eight cities selected have a wide span, with locations in northeast, east, southeast and southwest China. Economically, the affluence level in each city is on or above its tier average.

The respondents in this research include mobile and telephone users. The proportion of male and female is balanced. Ages ranges from 18 to 45.

The following insights are obtained:

1. International brands are marketable to a consistent share of the population across city tiers.

A consistent share of population in each tier support premium products. For example, some people are willing to pay 600 RMB or more for a pair of shoes, while the proportion of population that would spend less is not consistent. It differs from one city to another. The lower tier the city is, the less money the consumers would spend.

2. Brand image places more influence on male consumers than on female ones.

According to the research, male consumers view brand as a short cut for evaluating the product quality, while the female are more likely to changing brands in their buying habits. In all cities, more male consumers than female ones like international brands.

3. Value for money is increasingly replacing brand as the top criterion for buying.

Quality, often reflected by product price or brand, is the top purchase criterion for the consumers in third and fourth tier cities. For consumers in first and second tier cities, value for money has become the top criterion for purchase. And it is gradually viewed as the top purchase criterion for consumers in third tier cities.

Over time, the importance of value for money will be recognized by consumers in all cities. Consumers will consider more about whether the product deserves the money they pay.

4. Chinese consumers are ready to experiment and try new brand, product and service.

The retail consumers in second and third cities are more likely to try new brands with new value proposition, which is good news for the brand that have not entered China market.

Half of the respondents in all cities are interested in new brands. In second to fourth tier cities, new brands with new functions or services can drive purchase will. Consumers in Xiangfan are the least likely to try new brands.

The bigger challenge exists when new brands enter first tier cities. However, 70 percent of the respondents in Shanghai are willing to try new brands. For Shanghai consumers, the proportion of buying and recognizing international brands are much higher than that in other cities. For retail marketing, word of mouth and high end media and advertisements in the first tier cities are critical to new brands. Word of mouth is especially important for Shanghai and Chengdu consumers.

5. Chinese consumers are not familiar with the perceptions of many brands and products, which represents opportunities, and, at the same time, challenges.

From second to fourth tier cities, there is less clarity or certainty about international brands. Some consumers mistake Nike and Adidas for domestic brands, or simply do not know whether these brands are international or domestic.

Although there is no one single brand is dominant in any selected city, respondents in each city are aware of one or two domestic brands, which indicates the power of domestic brands. Consumers’ perceptions of domestic brands combine well with the brands’ positioning, indicating that respondents are more aware of local brands than international ones.

6. Chinese consumers are not willing to pay extra for an abstract concept.

Products marketing strategies based on low carbon and environmentally friendly are not considered to be an effective way to accelerate sales. Consumers only pay for the direct benefits, or for the benefits that can be seen, although the benefits are not proven.

Abstract benefits such as low carbon and other environment credentials need the support of a certain degree of money. Energy efficiency is an exception, although the benefits directly accrue to consumers. Low carbon products obtain lower premium than conventional substitutes because the benefits of the former have not been perceived.

Most consumers accept low carbon, but they do not regard it as a stimulus to buy in supermarket.

Often, consumers regard low carbon slogan as social responsibility statement of the manufacturers, but not a selling point to show the product’s value proposition. There are only 10 percent of consumers regard low carbon as a selling point with value proposition and do not complain.

A lack of industry standard and abuse of concepts of organic and green greatly weaken consumers’ trust into organic products. That is to say, many consumers doubt whether the food they buy is really organic. The distrust is especially in cities like Shanghai, probably because consumers in big cities are better educated and consider more about organic food, and they question the origin of the organic food.

7. It is not so clear as before to enter a China city with a retail concept.

The market penetration of high-end brands produces an obvious “halo effect”. Consumers in third tier cities have preference for the brands seen in big cities, which indicates their desire to imitate the lifestyle in first tier cities.

However, more than half respondents feel that the prices of high-end brands are unreasonable, and do not deserve what they pay. A similar proportion of respondent think that they are not familiar with many high-end brands. This finding offers support for executive’s statement that a brand has to achieve scale and visibility in order to succeed in China Retail Market.

Conclusion: how to enter China’s retail market?

Generally, findings are instructive for entrants in current and potential China market. High income consumers are more likely to view price as the symbol of quality. Consumers in first tier cities value international brands because in most cases they provide value for money. It is easier for consumers to recognize the positioning of domestic brands than that of foreign ones.

For China Retail Market in top three tier cities, value for money is important. While for consumers in lower tier cities, they take it as their signal that what the first tier city consumers are buying. This phenomenon seems supportive to the entry strategy of “appear in first tier cities and make money in second, third and fourth tier cities”, which is being followed by more and more retailers and brand owners. Because most famous brands both foreign and domestic are located in first tier cities, consumers in other tier cities may be more desirable for new brands, especially international brands.

Other important findings on China Retail Market:

Brand is an important signal of buying. For quality products, there is a need and interest in new brand in lower tier cities. Entering the top department stores in these cities requires brand awareness that has been established.

It does not necessarily do brand development in first tier cities, however, the “halo effect” it generates can bring success in relevant areas. Establishing a brand in Beijing, Shanghai or Hong Kong gives that brand visibility which will stimulate its sales in other regions in China. Brand visibility in first tier cities is important for stimulating the retail in other cities, and word of mouth is extremely important for establishing new brands in first cities. Value for money is becoming important for more consumers, which has replaced brand and price as a key factor in purchasing. Therefore, Chinese consumers are more likely to recognize foreign middle-end brands.

In second to fourth tier cities, new functions or features may appeal purchasers. However, some new concepts or products, such as organic products may be misunderstood, or their value may not stimulate Chinese to buy. Developing softer attributes, environmental credentials for example, may promote a brand’s status because of its social responsibility. However, it does not directly cause price increase in this price sensitive and confused market. Clear and direct benefits to consumers are better able to obtain higher prices. Before entering China Retail Market, international brands have to analyze your target market, and after entering, you should continuously examine brand positioning to achieve your targets and obtain market share.

Related reading: 5 Questions to Analyze Chinese Consumers for Foreign Brands

5 Do’s and 3 Don’ts for China Market Entry

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Stepping into the China market is a complicated process. China is a large and uneven country, and its market is complex and constantly changing. A company’s strategy is likely to be influenced by a number of factors, including local social factors, business environment, market need, customer preferences and so on. There is no single best approach by which foreign companies could rely on to enter the China market successfully. Facing such a complex economy as China, many foreigners may feel confused and discouraged. Therefore, Jingle Office has summarized  a do’s list and a don’ts list for your reference to help you succeed in the China market entry process.

5 Do’s for China market entry:

#1. DO investigate the market carefully before your China market entry

China is a huge country with regional differences in economic development, income, regional strength, language and culture. So before diving too far into the process of entering China, we strongly advise you to take some time to conduct market research: the current competition, the key competitors and their strategy, laws and regulations in your industry, market demand, local consuming habits and preferences, the legality of your product or service, the cities suitable for your business, etc. If possible, you can make a visit to China to get a direct sense about the country and market, and start networking in China.

#2. DO have some basic knowledges about the Chinese culture

Keep in mind that cultural and social factors are important for the business of your China market entry. So before selling to China, make a deep investigation into the Chinese traditions, cultures and taboos, and pay special attention to them when conducting business activities. The other thing you need to do is build a good relationship with your customers, distributors, partners and government officials, which is an intangible power to boost your success in China.

#3. DO choose the right legal entity for your business in China

According to the product or service you offer in the China market, you have to choose a legal entity. There are different types of business entities you can choose from, the most common models being representative office (RO), joint venture (JV), and wholly foreign owned enterprise (WFOE). Each one of them comes with its own strengths and weaknesses.

A representative office is easy to establish and usually comes at a low-cost. However, it is not allowed to engage in any profit making activity, so it is not an ideal choice.

The joint venture, which may seem like a safe route, can turn into a disaster for some. In order to open a joint venture, you need a Chinese business counterpart. Mutual trust is difficult to build, so most of joint ventures fail due to different aspirations of both parties.

A WFOE is fully invested by one or more foreign investors. A WFOE owns the full control over its business transactions in the China market, so it is the most popular form for foreign companies. However, because of its complexity, there are a lot of documents required for licenses application. Each city or region has different requirements for the documents.

#4. DO write a good business plan before your China market entry

It is an important step to help your business succeed in China. Take the time to write a business plan before you enter the China market, and make it as clear and specific as possible. The time you spend on the plan will pay off in the long run. Put simply, a well-designed business plan can determine the fate of your business in China. Your business plan should include but are not limited to: description of your product or service, your advantages outweighing your competitors, what problems your product or service can solve, whether there is a need to adapt your product or service to the local market in China, post sale service, projected revenues, and budget requirements, etc.

#5. DO select a trustworthy partner in China

At the beginning of your China market entry implemetation, a reputable partner is indispensable. The partner can help you solve almost anything for you, ranging from market research to product localization, from registering your business to legal assistance. Your partner is more familiar with the business environment, laws and regulations, and cultural features in China than you do, which can save you time and prevent you from unexpected troubles. Nevertheless, it is not easy to find a reputable partner, so take your time to check his or her qualifications before rushing into an agreement. If you find such one, take your time to build mutual-trust and long-term relationship in order to succeed in China.

3 Don’ts for China market entry:

#1. DON’T act in haste

Many companies want to sell their products or services in the China market quickly, but time pressure can create problems later on. It tends to result in sloppy planning and analysis. Market investigation takes time. The more detailed the market research is, the more time it will take. Finding a right partner and identifying his or her qualifications takes time. Especially, bureaucratic procedures are often time consuming. All of these mean that entering China market will be a long and difficult process. So do not act in haste, and take your time to do thorough investigation. Understanding and accepting this will help make the process go more smoothly.

#2. DON’T rely heavily on Chinese laws

Some laws in China are vague and can be interpreted in many ways. China’s enforcement of protection of property rights is weak. In addition, although laws and regulations prohibit local trade protection, it exists in one way or another because of the vagueness of the laws and regulations. Seek help from your Chinese partner to get legal assistance when you need.

#3. DON’T treat China as one whole market

It’s a mistake to treat the China market as one single market. China has 56 ethic groups. Their life styles, consuming habits, traditions and cultures are quite different. And there are great differences between different regions, for example, East China and West China. So it is a big misconception that the same market strategy applies throughout China. To be successful in China, you need to do your research properly before entering China market, and select one region that suitable for your product or service and your business to start. If needed, localize your product or service to meet the requirements of local market. A Chinese partner who is familiar with the Chinese business and cultural environment will help.

Failure comes from a lack of preparation. Ensure you have taken the above lists into consideration before your China market entry. And don’t hesitate to contact Jingle Office for help if you need.

Related reading: 5 Strategies to Find a China Distributor for Your Business

5 Strategies to Find a China Distributor for Your Business

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Before you start business in China, you should look for a reliable collaborative China distributor for your business. No matter how great your product is, you need to get it in front of Chinese consumers to make a profit. Find a China distributor for your business are a feasible and cost-effective method of getting your product to the widest possible customers. They will be responsible for conducting product sales and collecting report feedback from clients. Also, a China distributor is likely to get you excellent and valuable information about the Chinese market and about potential customers.

Yet it is not easy for foreign exporters to find proper China distributor. Given this, Jingle Office offers the below strategies you can use to help find a right China distributor for your product.

1. Search for Potential China Distributor

After you have decided to enter China market, you should have a sound knowledge of the market. It is recommended that if you plan to export to different regions in China, you’d better have a different China distributor in each region as there is not an efficient nationwide distribution system in China. Then where do you find?

The most common method is to issue a request through an organization, such as the bilateral chambers of commerce and regional associations, or via the export department of your government.

You can also get information by asking your friends or other exporters who have found their distributors in China. It can save yourself time and hassle as word-of-mouth referrals could be useful for finding a distributor.

A direct method is to visit China. To develop the necessary relationship with customers and distributors, it is important to visit China. It will help you get first-hand information. During your visiting, you can attend trade fairs in China, which is helpful to find potential distributors.

A less reliable methods is the internet. Screen the potential distributors you find through the internet.

When you are seeking distributors, you have to be patient, because it is a hard task to differentiate between legitimate and not-so legitimate distribution businesses, and at the same time to meet your business’ needs. Often, you can test out possible distributors in some way first, then develop a short-list and approach the short-listed companies.

2. Select Your China Distributor

First, you need to know the answers to the following questions because different distribution companies in China have different distribution networks:

Do you want them to market your product?
Which market segments do you want the product to reach?
What kind of retailers will want to sell your product?
What customs and local requirements will your product need to meet?

Then check the following information of your distributor: Sales and marketing capabilities, sales performance, knowledge of the local market, inventory handling capabilities, and management ability. And other qualifications include the company’s legal standing, the company’s current financial situation and information on the company’s suppliers, competitors and customers reviews.

Keep in mind that the quality of your distributor matters. You must want to be associated with the high quality partners. Ensure the partners you select have a strong local reputation in China.

3. Avoid Scams and Risks

Scams are not unique to China, but its distance from your home country, the impenetrable language and vastly different culture combine to make even the shrewdest businessperson liable to losing money through fraud. You can contact your nation’s embassy in a Chinese city for a list of reputable distributors according to their records, and look for particular attributes of the distribution company (such as good references, language capabilities, staff numbers, geographical coverage, sub-agent networks, knowledge of markets and market segments, familiarity with your product/s, financial stability, appropriate storage facilities).

In addition, have knowledge of local conditions and regulations in China. Some of the main risks are country, political and industry risk.

4. Reach an Agreement with Your China Distributor

Actually the negotiation process effectively starts when you make your initial contact with your potential distributor. You should be continually establishing your value throughout the process. Prepare a business terms document first which lays out the general business terms. The agreement must be to structure an alliance which will achieve both parties’ objectives. Don’t accept a deal which fails to achieve what your company needs. Ensure you fulfill all of your responsibilities under local law. Get legal advice so contracts with business partners are both valid and fair. Also, make sure all of your actions are legal in your country.

5. Manage the Relationship with Your China Distributor

Before you uncork the champagne bottle, realize that after the alliance agreement has been signed your work has just begun. You now need to work with your new partner to develop an alliance plan that outlines partnership goals/objectives, action plans, rules of engagement, and checkpoints, and you will need to assign an alliance manager to manage the relationship and execute on the plan. It is more difficult to manage a partnership than a single company. It is essential to establish excellent communication channels between the two firms. Have regular meetings. To overcome problems of distance, use technology as appropriate.

Related reading: The pros and cons of doing business in China

6 Tips Help you Start a Business in China

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For those in business community of other countries, the news over the last decade or so focused on the supply chain advantages of China. China became a massive export machine and manufacturing juggernaut, with its low labor rates, stable currency, highly disciplined workers, and excellent logistics infrastructure. Although there are still supply chain challenges with sourcing from China, China has proven to be nimble and capable of producing ever more complex products. Ongoing quality improvements, productivity gains, and increased management sophistication will further solidify China’s manufacturing prowess.

Most successful companies today, regardless of revenues, have created a concrete China supply chain strategy, thought about a China supply chain strategy, or figured out a way to combat a China supply chain strategy. However, moving forward it is clear that most global businesses will be talking about something else with respect to China – start a business in China.

China has roughly 1.4 billion people, with 56 percent living in cities, which are poised for considerable growth. New research shows that the country’s urban population will reach 926 million by 2025, and top 1 billion by 2030. There will be an enormous opportunity for global companies to support this trend with products and services.

It is no secret that 2015 GDP growth in China increased by 6.9 percent. China has had the fastest growing major economy in the world for the past 30 years, with an average annual GDP growth rate above 10 percent and per capita income growth at an average annual rate of more than 8 percent. China now ranks as the second largest economy in the world behind the United States.

As per capita income has risen and wealth creation has exploded, Chinese consumers and businesses have become bolder in their purchasing habits, buying Western brands and looking to utilize strong cash positions to purchase more. Consequently, in 2016, instead of further refining a China supply chain strategy, companies of all sizes will find it necessary to start a business in China.

Jingle Office, has compiled many best practices that companies should consider when implementing a China strategy and start a business in China, whether taking a supply chain or market entry focused approach:

Strategic Fit

Truly understand why China makes business sense. Certain business models have a very strong China angle, while others do not. Just because everyone else is going and start a business in China does not necessarily make doing so a fit for every business.

Relationships

Relationship (guanxi) is extremely important for your business success in the China market. Often, once a good relationship is built with your potential partner, business deals will be smooth and secure. Building good relationships with local authorities can help you avoid unwanted difficulties and frustrations.

Local Support

There are a number of complexities involved when start a business in China. A company should be comfortable working with government officials and should understand the legal landscape. The best way for foreign companies to manage these challenges is to have a strong, trusted local presence on the ground in China.

IP Protection

The laws, practices, and challenges associated with intellectual property in China are significant. There are several strategies that companies can use to protect IP, so be sure to give this due consideration before jumping in. Many Western companies have gotten burned in this area.

Flexibility

Things move and change very quickly in China, so be prepared to adapt and adjust business models and practices. Don’t be afraid to recognize and correct mistakes. Chances are that most companies will not get everything right the first time and even if they miraculously do, the capricious business environment will force them to make large and fast changes to keep up. That is why it is so helpful for foreign companies to have local support and experts who can help them be successful.

Be Patient, But Have Fun

There is an enormous opportunity in China. It is truly a unique place and many businesses will be wildly successful here. Take some time to soak in the culture, the atmosphere, and have fun. Western businessmen are often impatient, but the Chinese way of doing business is different. Respect and learn from it. The road to successfully start a business in China can be challenging and long, but be patient and enjoy the experience.

Jingle Office is always in the position to offer help, so do not hesitate to contact us if you have any questions.

Related reading: Start Your Business in China: If Not NOW, Then When?