Doing Business with the Dragon – Selling to China
With over 1.2 billion people at first glance China appears an easy market, though the reality for many westerners is that China often equates to a struggle. Ebay, Tesco, B&Q, Google, Best Buy, Taco Bell, WallMart, Wendys, Starbucks and McDonald’s are all living proof. However, don’t be put off as selling to China is not that difficult. It’s challenging, yet not impossible.
From our own perspective and experience, (resident in Shanghai since 2003) the thought of selling to Chinese was not a consideration back then – It was unimaginable. China made product for the rest of the world and the thought of selling back to the Dragon was not palatable, at least not back then. Except that is for the tiny percentage of visionaries such as Volkswagen who took it upon themselves to become pioneers. VW were the first foreign company to joint venture in China (October 1984) initially manufacturing for local Chinese markets, yet as time passed, they later turned their attention towards export – Consequently, it’s the Germans we must now thank for opening up and creating a what has now come to be known as one of the worlds largest “import export” markets.
Avoid going into China “Gung Ho” (over enthusiastic) – While the worldly trend appears to be drifting towards erosion of the middle man – Successfully selling into China requires the opposite. An expert is vital and will save you many headaches, heartaches , vast amounts of time, energy, and money. Make sure they are fluent in both western language and mind-set, and while it’s relatively easy to outline this criteria, the reality of such quality people are still few and far between in China. They exist, it’s just that they exist in very small numbers.
– Find a Native English local? – When it comes to sales and selling in China, it’s human nature to think we as individuals each know best. The reality is – China is different…… really different. different structure, different language, and an entire opposite psychological mind platform, i.e Chinese psyche is unique to say the least. Underestimate this and one can quickly experience issues, understand and experience delight. Save yourself a fortune – eek our a local who is fluent in both Chinese and English language, and mind-set (easier said than done – yet it’s possible). Yet make certain your local is not an agent or a shadow agent. That is, one that flaunts your business card, answers the phone, accepts your salary, yet spends most of your time involved with other project as well as their personal life. This is a reality and makes up the majority of agent type consultants.
One the other hand, there is a small and growing minority of both male and female Chinese who have spent 20 years plus – Not 1-5, and not 5 to 10 years. The reliable ones tend to have in excess of 20 years overseas living and working experience. These are the ones who have the ability to embed and switch between both cultures. Less than 10 years, and they tend to lean towards their native land.
– Secrets for Selling in China – Theres a truth. It’s not just who you know, but what you know that counts in China – As an example: As much as one can be patriotic, and as much as one would prefer the security of stepping into China with some powerful backing. At all costs The British Government Chamber of Commerce ought to be avoided. Reality is these organisations are not favoured by China in any shape or form and one would do well to avoid – Avoid!
Preference for imported products
Preference for quality over price
Chinese perception favours western products
Chinese are more open to new products and services than most other cultures
85% of everyday Chinese people still in poverty
Competition is enormous
Your products WILL be copied
Selling to Chinese is a psychological experience
Chinese scrutinise, compare and barter more than westerners – They are considered very savvy buyers
Over the years has seen China grow and evolve faster than most nations, yet don’t be fooled by public perceptions.
The reality is that for many businesses “surface appearances” are far from the reality.
For example, Costa Coffee is a British joint venture between a Chinese state-owned company called Yueda. Costa entered China LATE, around 2007 with Yueda restricting their openings to 500 shops along the east coast of China only – Compared to Starbucks who have 1,716 throughout China, costa are a small player owning only a percentage of their own business. In Whitbreads 2014 annual report, Costa stated “some new openings have taken longer than expected to reach maturity”, and in that same report costa China quote £208,771 system sales per store, compared to the UK’s £465,497 system sales per store, which for a market as strong as China’s suggest a sluggish performance.
Tesco are a similar story as Costa, who entered China around 2004. However, since their arrival Tesco have in their own words have “struggled”, recently announcing that they are now paying £345m to put its 131 stores into a partnership with the state-backed China Resources Enterprise. Tesco will have a 20% stake.
Last doom and gloom example is B&Q (Kingfisher) who entered the Chinese market in 1999. However in March 2009, B&Q closed 22 of its 63 Chinese stores, claiming the housing slump was the source of it’s problems.
In their 2013-14 annual report, Kingfisher (B&Q) announced £181m tax loses in China.
Can you profit in China?
Yes – Though to enter China and break profit, statistics show a critical need to embrace everything about China, and that includes spending time and effort to acquire an in-depth knowledge of culture, language, and a genuine desire to work with, for, and inside China – psychology is very powerful in China. They then to operate from a platform of practicality, yet also from the heart. In short they can be intensely pragmatic and if theres a need, theres a business. On the other hand they are often found forming decisions and making judgments based their present emotional state.
Who are Pronimen?
Pronimen are a small independent family operation.
Ming is native Chinese (expertise – Buying/Sourcing)
David is native English (expertise – Psychology – Training & Development – Sales & Marketing)
Since coming together, David & Ming’s expertise has been of benefit to many SME’s and global corporates, sourcing from and now selling back to China. David has mentored many expatriates, local Chinese, and has been compiled with a great number of executive development programs.
While Pronimen’s client base remains protected, clients such as Liberty’s of London, O.K. Magazine, British Telecommunications, and Discovery Channel are all worthy of a mention.