Deciding on China
- Carson Block, China Primer
There is a tremendous amount of hype about doing business in China these days. The large multinationals are all here, and many small / medium-sized enterprises (SMEs) seem to be tripping over themselves to enter China in some way. However, China is not suitable for a number of businesses. This site, and the book it complements, Doing Business in China for Dummies (Wiley & Sons 2007), are designed to 1) give you a realistic picture of what is involved in doing business in your field in China, and 2) introduce you to companies that can help you execute your business in China.
Starting with the Law
The first inquiry you should make when thinking about doing business in or with China is: What are the legal restrictions on your business in China? Foreigners in China have a saying about doing business there, “Nothing is permitted, everything is possible.” It is often the case that when researching the law, on the surface some of the things you want to do are impossible or difficult. That is when you search for “work arounds.” Expect to make lawyers central to your planning process – even in the very early stages. Doing so can save you a good deal of time and expense down the road. See our Directory for a list of attorneys based in China who specialize in working with SMEs; also, look for content on our site that comes from attorneys practicing in your area of interest.
Is China Right for Your Business?
We cannot tell you whether China is right for your business; however, we may be able to tell you whether it is wrong. Doing Business in China for Dummies, Chapter 4 (Planning for Success in China) has more information on deciding whether China is suitable for you and your business. If your company has the following characteristics, you should think twice about expanding to China:
- A “must be in China attitude.” We frequently hear the managements of companies coming to China saying that they “must” be there. This is a bad attitude because it will often push your company to ignore problems or limitations of the business plan. In addition, it often leads to rushing, which leads to mistakes. In China, mistakes tend to be very expensive.
- Unwillingness to relocate good personnel from the home office to China. If your company thinks that it can send its good people over only for meetings every so often during set-up or operations, it is making a mistake. We advise relocating capable people from the home office to China to work on establishing and running the company in China.
- Tepid support from the board of directors. Regardless of what your financial models tell you, China will be very expensive. If done right, it will also require a lot of non-financial resources from your home office. If the board is only lukewarm regarding the China plan (or has unrealistic expectations), your company may not have the fortitude necessary to succeed in China.
If you are doubting whether being in China is a good decision for your business, keep in mind that there are plenty of ways to take advantage of China’s growth without setting up an operation there. Consider importing and exporting from China or outsourcing parts of your operation or supply chain to China. Doing Business in China for Dummies has more information on these models.
More Information on Considering China:
Click the links to return to the Why China? section or learn more about Starting a Business in China, China Business Law, and Chinese Negotiation.
