A lot of people think China is the next frontier of commerce for big companies and small businesses alike.
A recent article on wsj.com referred to the opportunity there for American companies as a ‘big appetite for U.S.-made goods’ among the wealthier segments of the Chinese people. Case in point: U.S. furniture makers Ethan Allen and Ashley Furniture are now selling in China—the former, shipping over goods made in plants here, the latter, mostly manufacturing in Asia.
Those are big companies, but a recent nytimes.com Small Business Guide, New Path for Trade: Selling in China, focuses on the almost limitless opportunity for small businesses in China, as well as the many potential pitfalls. But most agree that China is wide open and worth the effort: A 2012 McKinsey & Company report, From Mass to Mainstream, predicts that it will be the world’s largest growth market for many years to come. Proceeding slowly—and working within the established system—are absolute musts, especially for first-timers.
The guide provides observations and tips from a variety of consultants and businesses who are already selling (or who have tried to sell) there. A consulting company CEO calls his China experience ‘not just another country but another universe,’ with the differences and particulars of doing business going way beyond the language to things like having to fight horrendous traffic in order to do virtually everything in person, not by phone or by fax. The learning curve is steep, and the system, not especially forgiving. Apparently, missteps can get businesses blackballed, no matter how innocent or well-intentioned the mistakes.
Consequently, consultants of every variety are necessary—and thriving. Although some businesses hire consultants here, nearly every business must tap into established businesses on the ground in China, often selling through distributors or licensing products to Chinese companies. Now, however, many businesses expecting to be in China for the long haul are encouraged to invest the time and money to establish themselves as a wholly foreign-owned enterprise, or WFOEs.
Beware of product infringement and knockoffs—big issues in China. This is another area where establishing partners on the ground can help. Assistance may also be available in your home state. Georgia, Pennsylvania, Mississippi and Tennessee are among those that have international trade programs that offer counsel.
One consulting firm CEO who helps U.S. businesses forge pathways into China suggests thinking of doing business in China as:
- Culture – Complex, with endless hidden and counterintuitive meanings
- Harness – Build relationships and local business connections
- Intellectual property rights – ‘First to file’ in China wins the rights—totally different than in the U.S.
- Navigate – Strong local partners will help guide the way and avoid pitfalls
- Anticipate – Be ready for fierce local competition
Another consultant sums it up this way: Don’t go in too fast. Don’t go in blind. And don’t leave your common sense at home.
Image courtesy of Stuart Miles / FreeDigitalPhotos.net