Minimizing Your Risks when Doing Business in China

In my last post I talked about various risks doing business in China. At this point, you must be wondering how can I minimize these risks. You can start with...

1. Educate yourself. In this age of information, there are tons of information on China online and in print. I find Google News a one stop shopping for all my China news since I can customize my news feed to topics such as "China" or "China Business" or "China Widget Industry". The best part is these news are from all different sources to give you a complete perceptive. Also check out China Business Review and this previous blog post I have done on business travel must knows. Click here.

2. Talk to people. There is an old Chinese saying "Three people walking, there must be my teacher(s)" which means when I'm with some other people, there must be something I can learn from them. So talk to people have done or currently doing business in China. They can not only give you insights on their first hand experience, most likely they can provide you with contacts which is very important (see number 8 below).

3. Go to China. This is the best way and fastest way to get to know China. Reading and talking to people are great, but will only get you so far. Actually being in China, will help you dig that much deeper into the country and what it has to offer. Try to plan your first trip in a very comprehensive way, not only see the large cities such as Beijing or Shanghai, but also check our small to medium size cities. Don't stick to one area, try to touch all four corners of the country: north, east, west and south. They can be pretty different.

4. Stay Flexible. Everything is changing rapidly in China. Trend, policy, law and etc. all may effect your business plan a great deal. You and your business thoughts must remain extremely flexible and do non stop research as your develop your business plan.

5. Budget Enough Money. If you want to buy a pair of socks in China, it is going to cost you just pennies. If you want to actually make socks, it might cost you. Doing business in China is not cheap. From initial research to hiring consultants to crossing the red tape, you will need money and lots of it. You also need a solid cash reserve for very probable issues such as surviving cutthroat competition shake downs.

6. Protect yourself. Always get everything in writing in English and Chinese. Guard your IP through any legal means possible and use common sense such as do not leave your blue prints lying around for everyone's viewing pleasure. However, you don't need to be extremely secretly around your Chinese business partners. Give as much imformation as they are giving you.

7. Reach out to organizations. Canada China Business Council. US China Business Council. US Commercial Service China. These organizations are usually right on top of the latest news and information pertaining to your business.

8. Understand what is Gangxi. I have spoken to many doing business in China veterans. They all have reflected their experience as such: it does take a long time to build relationships or Guanxi (关系 a phrase you will hear a lot) in China; yet without it you can't do business in China. There is no such thing as making a cold call in China, it always has to be a warm call.

9. Learn to negotiate. If you want to negotiate in China, you have to not only understand the way the Chinese negotiate, you better learn it too. Try to find out all you can on who you are dealing with from who is in charge to government ties. Trust me, they are doing the same thing. Also, do not underestimate the quiet ones! You have to be very patient. Don't be surprised when the contract is signed an hour before you get on your plane to head home. There are so much to be said about art of negotiation. It is one of my favourite topics! When it is time for you to enter the negotiation phase of your business, I highly recommend more in depth research and plan out specific strategies and tactics.