The risks of doing business in China are well documented, and foreign firms often find themselves leaving the country with their tails between their legs. With that said, with booming economic conditions, the temptation to do business with the doing business in china is a strong one. One of many factors which will define the achievements of your business relationship is risk management here are a couple of ideas to help you get stated.
Conduct a total and Thorough Risk Analysis. It’s amazing the number of companies forget to conduct some planning before they come across trouble. Risk analysis is difficult in China however, not impossible, you should count on a lot more than local media and representatives from the firm (and native government) to comprehend the marketplace position of the prospective partners. Your industry body or your chamber of commerce is a good assist in learning more, or you could engage a specialist consultancy to perform the digging to suit your needs.
Prior to deciding to enter into a partnership figure out how much risk you are able to bear and in case the offer exceeds that threshold – move on. For those who have a risk management insurance policy for other countries you need to apply precisely the same high standards to dealing in China rather than lower them simply because you are salivating at the very thought of higher profits.
Create a Problem Prevention Culture. As well as filling in lots of beautiful balance sheet predictions at the outset of the project, invest some time planning around conditions that may arise throughout things.
Create a full group of contingency plans for every single eventuality including practical solutions to be used for workarounds. Make certain you have set milestones for each stage of the project, as well as an exit technique for every place in that plan too even though you don’t intend to use one.
Never forget that business in China is situated around personal relationships and patent application process may mislead or perhaps outright lie to you personally when there is another personal relationship (outside yours) that would be damaged through the truth.
Many Chinese businesses are also not unconstrained entities since they are within the West and local political issues may have a significant influence on their ability to work with foreign organisations. This might be hard to gain visibility of and enquiries into what’s happening may be brushed off, particularly when there is any “loss in face” connected with keeping you inside the picture.
Ideally you ought to develop contacts and relationships in local government and central government who might be able to intercede for your benefit if things look to be progressing towards failure.
The complexity in the business culture in China means that you should spend more time and energy understanding working practices before you decide to move into partnership and it also will make a risk management strategy a crucial part of managing relationships successfully.
Of course you will find exceptions towards the rule, and I suggest that when you do find a long term mentality supplier or partner, stay with him, he can save you considerable time, effort and cash.
You should hence, realise the fact that you need to usually have a range of potential suppliers and “friends” to change to if your service you get does drop. Many foreigners just feel that they hit the jac.kpot once they fjhflj one deal and they just unwind and expect a level of service like they receive inside their country without realising that the supplier will typically look first in the interpreting translation services he will make because deal rather than throughout the length of the relationship.
The meaning of quality: I love this word. It will be the most used word in china besides “yes, no and sorry”. Everything is apparently of such a top quality in china, that the word itself has lost its meaning. As Timothy Ferris says in the book “the 4 hour workweek”, the more you make use of a word, the better it looses its meaning.