5 Myths for Doing Business in China

1. I need to drink myself silly to do business in China.

Not anymore – in the old days before China got itself on its feet it may have been true – but today’s brand of leaders shun the late night drinking sessions and karaoke bars. Today’s leaders tend towards being sober professional business people that are more interested in the business discussions that staying out enjoying the nightlife. Toasts at meals have moderated hugely in the past 20 years and you are unlikely to be forced to get totally smashed – unless that’s what you want yourself.

2. I need to pay people to do business in China.

Paying people to do business is corruption and the Chinese government views this with extreme distaste – so much so that every year they take a pile of corrupt officials on a journey they don’t come back from. If you are doing business in China and are asked to ‘grease the wheels’ walk away from the deal. If they get caught, you get caught – and that’s your business life in China down the gurgler.  Forming relationships to do business in China can be done without paying bribes. Gifts – such as bottles of wine, silk scarves etc to show your appreciation are perfectly acceptable – but don’t be tempted to add a wad of notes to secure the business.

3. If your partner has good ‘relationships’ (guanxi), you have good ‘relationships’.

Your partners’ relationships are his relationships – not yours – so when introduces you to the Mayor/Party Secretary etc don’t assume that if things go bad this relationship will be on your side – he will be on your partners side. You need to develop your own independent set of relationships.

These relationships cannot be developed overnight  they require time and sincerity – time to break through the reticence of the person you are developing and sincerity in showing him that you understand how things work.

And that takes time – which leads onto Myth 4.

4. I can jump on a plane with a great idea/deal in my briefcase and secure business immediately.

Doing business in China requires time and patience – you simply cannot arrive in the country – no matter how much prior work you have done remotely – and develop the business relations you need to overnight.

Plan on taking around 6- 12 months r of just ‘kicking around’ to find out who is who in the zoo, where it all fits in and then make your move. Chinese business is slow on the preparation and incredibly fast at the implementation phase – so do your homework carefully by being on the ground and finding out everything you can about the people, the companies, the market and the government bodies overseeing your line of work.

5. I have good contacts in Beijing – I am OK!

People often assume that because they have developed some links with Central government they can then do business anywhere in China. Remember ‘The Mountains are high and the Emperor is far away’ – China is a vast country – vast in size and population – local connections are needed to do anything locally. In fact the reverse scenario is mostly true – touting good relations with Beijing often gets the locals feeling they have been bypassed – and that’s not good for your business. Stick to the provincial/municipal level to get business moving.

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