When it comes to doing business in China, being as informed as possible is the best pathway to success, writes Austrade’s Shanghai-based Senior Trade Commissioner Christopher Wright. 

Research and Advice

Don’t go in blind. Talk to as many people as you can find who are doing business in China. Talk to your lawyers and your accountants, to your state government development agencies, and to Austrade. The more you tune your ear to the benefit of others’ experience, the better you get at discriminating what is relevant to you and what is not.

Conservative Estimates

Be conservative. Lower your revenue forecasts and increase cost and time estimates. If a business plan still stacks up with less than glorious sales projections, it is likely to be more realistic and therefore more reliable!

Sound Commercial Practice

Don’t leave your brain on the plane. This comes down to one simple principle – “Whatever you do at home, do here”. Or the reverse – "If you wouldn’t do it at home, don’t do it here.”
Adopt sound commercial practice and if anything, tighten your processes for China. Do not think that business in China is different from Australia, and that you are therefore required to adopt different or more Chinese commercial practices. This approach leads to disaster.

Good Business Ethics

Secret commissions, bribery and corruption are a no-no at home – just as they are in China. The slippery slope can end in dark, damp and lonely places, so don’t go there. Corruption has been identified by the Chinese Communist Party as the number one threat to its authority, and is taking steps to stamp it out. High standards will establish your corporate reputation and earn respect – a far better route to sustainable business in China.

If it's too good to be true...

An old principle – if it sounds to good to be true then it probably is. Don’t believe every claim someone makes for themselves. One example is the area of relationships, sometimes referred to as ‘guanxi’. Sure, relationships are important to doing business in China – they are in many places – but testing someone’s claims to relationships can be a much more difficult thing to establish. Tactical use of relationships linked with sound commercial strategy and a sceptical ear for good news is bound to be a more reliable approach.

Risk Mitigation

Something always goes wrong, so best plan to be ready for it. Ask yourself up front: “What are the acute vulnerabilities in my business plan?” Identify them, assess their impact, come up with some indicative mitigation strategies, and quantify the cost to the bottom line. This way you will be ready for some of the downside. And if it doesn’t happen – it will be a bonus to your results.

Partnerships

Your market entry may require that you work with others. That’s business. But while your chosen partner may be a great boon to you moving into China, don’t assume that you’re wed to them forever and in all regards. It’s usually a case of ‘same bed, different dreams.’  Recognise this up front, accommodate the differences and plan for an amicable divorce when the time comes. Today’s JV often splits to become tomorrow’s two separate businesses, possibly even competitors.

Adaptability

As in risk mitigation, be prepared for change and to adapt to change. As the Chinese say, “swim like a little fish”, twisting and turning to adapt to the changing currents. ■

FOR MORE INFORMATIONTION VISIT:
Visit: www.austrade.gov.au

*Christopher Wright is the Australian Trade Commission’s Senior Trade Commissioner in Shanghai. Christopher has more than 20 year’s experience working and living in Asia and prior to joining Austrade, was the Chief Representative and President of BAE SYSTEMS in China and International Marketing Manager for British Aerospace Australia.