China for China Selling

1. Nothing is easy; everything is possible. Ask any veteran Asia expert, they will tell you that there are two key principles. First, nothing is easy. Second, everything is possible. If things are too easy, remember principle one. If you encounter difficulties, remember principle two. Also, do not come into China with the view of investing for the long term, plan to make money only five or 10 years down the road. If you do not have a plan to become profitable within two years, do not come to China. China can be a black hole absorbing huge amounts of capital unless investment is focused and well planned. Do your homework.

2. China is 30 countries. There are 30 Chinese provinces, each with a governor, language, ethnicity and culture. They are very different from one another. Treat China as 30 separate countries. Tailor and strategize your activities according to each.

3. China’s middle class is booming; if you can, aim for it. China now has over 60 million people with per capita income equal or exceeding $20,000 annually. They are everywhere, eager to buy Western branded goods. This group is growing rapidly, as China’s 9.5% annual growth builds their wealth. They are professionals, managers, engineers, many working for Western firms or global Chinese firms; they have money and are eager to show their prosperity with their conspicuous consumption. Shanghai’s Nanjing Road is a blizzard of global high-end brands, beloved among this group. At the same time, wise marketers customize their products. The Chinese have tastes that differ from those in the West. Learn their culture and preferences, and adapt your products accordingly. Do not try to sell products that have not been “glocalized”, in Tom Friedman’s phrase.

4. Use sales persons, not engineers. Companies often make the mistake of appointing Chinese engineers as their sales representatives. This is an error, he asserts. CEO’s who largely lack technical training head Chinese firms. They do not want or expect a flurry of technical information when they meet with a sales representative. They have experts whom they delegate for that purpose. Appoint experienced salespersons instead, who know how to approach CEO’s and purchasing managers. This is what the Chinese expect and want.

5. Build long-term relationships: In one sense, selling in China is no different from selling elsewhere. Building long-term relationships and trust are crucial. The first sale may be hard; but if you deliver on your promises, in general your buyers will be loyal. The Chinese bargain very, very hard. They seek low prices, to maintain their cost advantage in competitive markets. Once a deal is struck that they perceive as win-win, they are fair, and understand their suppliers need to make profit, too.

6. You CAN protect your intellectual property. Many companies fear that if they locate to China, their key intellectual property will be stolen. An expert lawyer in China once said that it is increasingly possible to defend trademarks and protect patents, as China itself develops I.P. and thus, finds it in its own interest to avoid theft of knowledge. For example, there is a pharmaceutical company that has a small operation in China, mainly repackaging, because it fears its I.P. will be stolen. This is an error. Either come to China – or stay away. If you come, come here seriously, and massively. There is no half way. China is building its legal infrastructure; acquire top legal advice and move forward. Generally, the risk is worth the reward.