Tips and advice to enter China

5 Factors that will determine your success in China

Strategy – It may sound simple but a lot of companies doesn’t have a clear idea or plan why they are here.

Are you going to sell or buy or do both here? It has big implications of how to proceed. If you are going to sell here so make a reality check.

• Are you competitive?

• What will you bring to the market?

• Why are you establishing here?

• Don’t go for the sole reason that everyone else is going!

People – Selection!
The first people you hire here will break or make your business.
If you have a good strategy and good people, you will most likely succeed.
There are no problem finding people but the difficult part is to find the right people.

We (at MPS China) often use the Chinese proverb
“An army of thousand is easy to find, but ah, how difficult to find a general”.

State of Mind – do not insist to do things as they are done back home. Be flexible! If there is no adaption to the local business practise you also will run a big risk of not succeeding.

Be Action Oriented - A bit harsh but to keep up with the tempo here there is no time for endless discussions and the Swedish “consensus”.

The Chinese market is always catching up, they are hungry and they are moving fast! Its not for not they have grown to one of the most powerful economic nations in thirty years. Keep up or be left behind.

The environment here makes the risks higher and to succeed you have to takes risks. It’s a high risk – high reward environment and the Chinese are notorious gamblers. And we need to keep up!

The Investment Budget – Make sure you have enough to invest.
If you are going to only buy from here to reduce costs this does not apply as much, but if you are going to sell and be an active player in the Chinese market you have to be prepared to invest.

For example the GDP/Capita and salary statistics are misleading while they are for the whole country. In the big tire city’s the living costs and salaries is increasing rapidly, while they are still very low in rural areas. It’s an enormous country and a diverse market.

Dos and Don’ts

General
Be here! Go here and see what is happening, where is the fabric, who are you dealing with, check everything several times and have in mind that China is a big country undergone severe difficulties and big changes and the society is built on relations.

The underlying implication is that we in west tend to trust to much, in Sweden we have a legal system and relatively small market. If someone misbehaves, there will be implications, which is not always the case here.

• So -don’t pay things in advance, at least not the whole amount.

• Be careful and check who you are dealing with

• When you start your business here, don’t give away power, money or ownership of the company

• Use advisors and trusted legal firms to support you!

Legal
They procedure of setting up a company is long and the regulations are strict. It’s very important that its done properly from the beginning, it does not work as for example in Sweden! If it goes wrong you will lose a lot of time and money. Use recommend and trustworthy companies that focuses on this!

Insure your personnel and yourself. The system is very different from Sweden and you can be held accountable for huge amounts if not done properly. Use advisors that are here and trustworthy.

Personnel and Organisation
Have someone here from Sweden that monitors the operations. If not possible hire someone here that understands Swedish culture, way of working, reporting, human responsibilities etc.

Personnel coming from Sweden will need a certain time to adapt to live in China and run a business in a Chinese business environment. They will need guidance and coaching from someone with experience from china and several mistakes and failures can be avoided. Don’t underestimate the difference!

China is “the place to be”! You can succeed in a way that is not possible anywhere else right now and the opportunities are enormous, history is being written every day.

But it’s a place like any other place in the sense that it takes hard work and proper engagement, given that, you will be amazed of what is possible to achieve.


                                                                                 Cecilia Helland