China today attracts many companies. If several years before everything was produced in China, today many companies would like to produce for Chinese customers. Mikhail Belousov, Co-founder and General manager to Market Entry Atelier, shares his experience on entering China market.
MEA: Mr. Belousov, what is a common difficulty to the companies who would like to enter China today?
MB: The main thing is the different approach towards business process.
Chinese guanxi （connections） is critical to how Chinese companies do business. We often advise our Clients not to hurry on the way to start business in China. Slow and steady wins the race is the best way to describe how business processes work here. There is not too much sense in discussing the business issues straight away during the first meeting with a Chinese Partner. Chinese have a proverb, first make friend and after that do business. The first step is to get to know each other. Building relationship takes time here. There is much work to do before you shake hands and confirm the deal.
MEA: Do the Clients trust the Consultants?
MB: Not really. Everybody prefers to learn on his own mistakes. Clients are often sure if they are successful in their own country, they know how to launch the business in China. But this is not that easy. Some methods, which work in the West, do not work in the East. You need to know lots of details about business in China. Those companies who learn them faster will have more chance to gain success.
MEA: And what is the main difference between European and Chinese negotiations?
MB: The Chinese word for negotiation — tan pan — combines the characters meaning “to discuss” and “to judge.” From a Chinese perspective, negotiation exists primarily as a mechanism for building trust so that two parties can work together for the benefit of both. Trust is built through dialogue that lets each party judge or evaluate the partner and the partner’s capabilities and assess each other’s relative status. But the concept of negotiation hinges on creating a framework for long-term cooperation and problem-solving much more than on drafting a one-time agreement. As such, negotiation in China is viewed as an ongoing, dynamic process that takes into account practical matters and context.
MEA: How would you advise to prepare for the negotiations?
MB: The most important thing is to know the subject. We advise to have business case calculated and market research done before coming to discuss the details. Understanding the circumstances and environment in which business takes place is critical. Only a foreign partner that is knowledgeable about the local situation and circumstances can be credible in the eyes of the Chinese partner and will build trust and bring better results in the future. Otherwise the first meeting can become the last one.
MEA: Do you have a Chinese Partner onboard?
MB: Definitely. It is important to form a strong local team onboard. Local talent can help you set better network and work out better deals, understand the culture and complexities of the market. You also need to have a right Chinese Partner. Guanxi – a core of Chinese business – belongs to mainlanders. Develop your own guanxi through frequent visits and accepting all invitations to meet and network with people.
MEA: What personal values are important for Chinese Partners?
MB: Successful Chinese are often very modest. Most of China’s super rich are publicity-shy. They rarely grant interviews and little is known about them.
As a rule, the Chinese are much more indirect than Westerners. We tend to be more black-and-white in our communication, while the Chinese tend to beat around the bush a little more. Chinese, for example, consider it rude to ask for something directly and tend to avoid using questions that have a yes or no answer to avoid putting someone in the position where they might have to give an answer they don’t want to give or hurt someone’s feelings.
The important thing is to be patient, listen and be able to hear. Learn to keep pauses during the meeting and use this time to think before you speak. Silence in China sometimes speaks louder than words.
Business in China is a fast developing target. To succeed, you have no choice but to understand Chinese market, business culture, learn fast and be flexible to adjust your management style to fit business situations.