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Top Ten Principles For Doing Business In China

invest in China

Update Date:2020-2-14 14:28:49     Views:549

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1.In China, take them outside the usual experience .

And luxury hotels and arrange for exposure to experiences relevant to your business.


2. Beware of industrial dynamics
A common cause of losses in China is that foreign firms are so focused on market growth rates that they neglect the basics of competitive analysis. In the beer industry, for instance, more than 20 foreign brewers entered in the mid-1990s, each of them planning to capture on average 15 percent of their market segment.


3. Take your time
Many companies want to get on the ground quickly. In one case, the CEO told his head of strategy to get China operations going within six months. Time pressure of this sort can create problems later on. It tends to result in sloppy planning and analysis.


4. Chinese society is collectivist
Members of the Conventional wisdom and cross-cultural management studies, such as Geert Hofstede’s seminal work, emphasise the collectivist nature of Chinese society.


5. Mistrust and opportunism are endemic
There are two opposite ways of extending trust. One is to trust until given reason not to; the other is not to trust until there is enough evidence of trustworthiness. China takes the latter approach.


6. Trust is interpersonal and takes time to build
A common safeguard against opportunism is to build relationships of trust with persons who matter for your business. Unlike in the West, the creation of personal friendship is a prerequisite of doing business. Building friendship takes time, which is another reason to avoid rushing into things.


7. Notions of “out-of-bounds” behaviour do not necessarily match.
Chinese negotiators occasionally push beyond what their Western counterparts consider appropriate bounds. For example, the representatives of a large Western firm were negotiating the distribution rights for one of their products.


8. Chinese society is hierarchical
Company decisions are typically reached in a top-down manner, with only the very top of the pyramid involved in decision-making. Mistrust puts limits on delegation, and supervisory control at each level is high.


9. Government in China is decentralised and in important respects, bottom-up
Conventional wisdom holds that China’s governmental structure is highly centralised, with all key decisions made in Beijing.


10. Be conscious of the large picture

Most of the growth in China since 1978 has come from private small and medium-sized enterprises. Today, they make up about 65 percent of Chinese GDP. Moving forward, policy-makers are keen for China to produce its own large multi-national enterprises, and government is re-asserting its role as the key orchestrator of these initiatives.


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