3 Things You Can’t Ignore Before You Start Business in China

As the world's fastest-growing major economy, China maintains about 7% of economy growth each year, and offers many opportunities to foreign startups. It continues to attract many foreign startups to come to China for business and investment. However, opportunities comes with challenge. To start business in China means you have to deal with its historical, political and cultural complexity. In this article, we will point out a few foreign entrepreneurs need to pay attention to before they enter the China market.

Understanding Local Culture

The entrepreneur first needs to be sensitive to China's culture and how it affects business. One important concept to master is “Face”. Face represents a person’s reputation and feelings of prestige within the workplace, family, friends, and society. For example, it is quite natural for foreigners to point out someone’s mistakes at the meeting, make alternative suggestions, or directly reject other's demands, but in China it will easily make people feel faceless. Therefore, it is best to point out the mistakes privately, and when others have done well give them a compliment, these are good ways to save the face for both parties.

Due to historical reasons, the concept of face has been deeply rooted in China, so foreign entrepreneurs should pay special attention to maintaining respect for each other. Giving gifts, accepting invitations, recognizing hierarchy, and showing interest in Chinese culture are all good ways to show respect for China.

Pushing Too Hard

Doing business in China often takes longer than it would in most western countries. In China, if you want to close a single deal, it requires a long time to go through a variety of tedious decision-making processes and personal relations building. However, many foreign entrepreneurs may be used to fast, direct and purposeful working methods in western countries,which might virtually pressured their Chinese partners or customers, and eventually lose the deal. So for foreign startups, they need to accept the custom of doing business in China. Before the end of the deal, it takes time and effort to cultivate the relationship. To go out for drinking or a meal with customers is a commonly used means of establishing relationships.

Business Cost

One of the reasons many people come to China is that they think China's labor and operating costs are very low, which will help reduce costs. But in fact they are ignoring the business costs, and in recent years the cost has a rising trend. For bidding projects, you probably will need to pay a commission. For mass consumer products, you probably will need to attract uses by constant discounts. For business development, you may well need gifts and treats to cultivate relationships. In addition, we should also see that in recent years, raw material costs and labor costs have been much higher than in the past, so these must be taken into account.

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