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Cinco verdades desagradáveis de fazer o negócio em China

Agosto 8o, 2007 por histórias do sucesso do negócio de China

Por Yue Xi

Cinco verdades desagradáveis de fazer o negócio em ChinaChina, com os 1.3 bilhão povos e uma economia crescendo, é irresistible a a maioria de companhias americanas. Mas um sonho não faz a realidade - sobre os anos muitos de para ter tentado rachar os mistérios do mercado chinês e muitos falharam. Se você falar às companhias que tentaram, including algumas das companhias as mais respeitadas em América, a resposta é inevitàvel “ele era muito difícil.” As dificuldades vão além das edições típicas que se levantam ao fazer o negócio no ultramar, como diferenças na língua, na cultura, nos regulamentos, etc. Em China, há-lhe mais.

Estas diferenças tornaram-se mais óbvias a mim enquanto eu gastei mais e mais tempo que faz o negócio em China, e ao descanso de Ásia, sobre os últimos cinco anos. Eu sou afortunado que eu sinto confortável em ambas as culturas - eu fui carregado em China mas minha família emigrated aos Estados Unidos quando eu estava em elevado júnior e logo depois disso eu me transformei um cidadão americano.

Assim, de minha experiência, são aqui cinco verdades desagradáveis que uma companhia ocidental deve enfrentar para ser bem sucedida.

1. Os chineses não seguem as réguas - e no fato, mostrará o ingenuity enorme que encontra maneiras em torno delas. Vez seguinte você visita China, justa ande para baixo a um canto ocupado da rua e preste atenção a o que unfolds. Ninguém pagarão a atenção às luzes ou aos sinais de tráfego, a menos que naturalmente houver um polícia que está no canto.

Beware assim de assinar acordos contractual. As companhias americanas têm uma opinião quase religiosa em contratos legais, tais como acordos da Non-Divulgação (NDAs). With their typical hubris, American companies expect Chinese companies to sign NDAs written in English, and enforceable in US courts. Chinese companies are happy to oblige, unlike for example Japanese companies. On the positive side, they want to get down to business as soon as possible and can’t understand why Western companies waste so much time conferring with their lawyers. On the negative side, Chinese companies generally never have any intention of actually honoring the agreement.

2. Chinese will copy anything. As part of their frantic drive to overcome the disasters of the 20th century, Chinese thirst for knowledge. They take pride in learning how to do new things, and duplicating them quickly and cheaply. There is very little respect for intellectual property - either from the West or home grown. A typical saying among Chinese is that “once we figure out how to make something, we will never buy it from you again.”

What that means for Western companies is that the Chinese will be very humble at first and will ask for training sessions to help with “knowledge transfer.” Once they get a product, they will take it apart piece by piece and figure out exactly how it works. There is nothing surprising about that - there is a long and rich history of reverse engineering in Silicon Valley - its a cornerstone of good engineering. But Chinese do it with the full intention of copying the product - and any parts that they can’t copy they will try to clone or buy locally.

3. The trap of joint ventures. Chinese love doing joint ventures with foreign companies and will tell you how profitable its going to be for both parties. Their logic is compelling - the Western company provides the cash and know-how, the Chinese company provides access to the local market and cheap labor. But want to know the real reasons Chinese love joint ventures? Its three fold. First, they get access to Western technology. Second, they get an infusion of cash overseas. Third, they get a nice tax break from the Chinese government. Needless to say, almost all joint ventures fail.

4. Expectations of high margins. When doing business in Chinese, most American companies expect to make the same profit margin as they do at home. Hah! This muddled thinking causes their products to be many times more expensive than local products. And it doesn’t take much insight to figure out that is not the path to success.

Even accepting lower profit margins, American products will still be more expensive than local products. Chinese companies have lower cost structures, and in extreme cases, can compete by giving away products for free and making up the revenue via services. And American companies simply cannot compete on services since labor costs are so much cheaper in China. So to succeed, you must offer a superior product that is worth its additional cost, but you must accept the fact you will not make the same margins in China as in the United States.

5. Last, and I hate to be so blunt, but the brutal truth is that most Chinese consider Americans stupid. Another Chinese saying sums it up nicely - “Taiwanese are old fashioned, Hongkonese are heartless and Americans are stupid.” Of course, they’ll never tell that to your face. In fact, many Americans love doing business in China because the Chinese will entertain them in a way that they’ve never experienced in the US. But don’t believe you are becoming friends, you are not.

Obviously, there are host of other issues you’ll run into, but these are the ones that have really struck me.

Yue Xi, Yue’s Yappings

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5 Responses to “Five Unpleasant Truths of Doing Business in China”

  1. BeijingMan Says:

    Xi Yue, you clearly know what you are writing. People who have done real things in China, either burnt their fingers or managed to get through, definitely have similar experiences and completely agree your points!

  2. Reflections of a BizDrivenLife » Blog Archive » Five Unpleasant truths of doing Business in china Says:

    […] Five Unpleasant Truths of Doing Business in China | China Business Success Stories: China Business Success Stories on Chinese Business and Commerce China, with 1.3 billion people and a booming economy, is irresistible to most American companies. But a dream does not make reality - over the years many of have tried to crack the mysteries of the Chinese market and many have failed. […]

  3. Parvez Ahmed Says:

    While I sort of agree with you I want to submit here that many Chinese companies and people are really very nice and most if not all agree that more has to be done to reduce pollution,poverty and prices in general - some may be indulging in cloning products and using cheap labor in the bargain - these type of ventures do not really last long unless really revamped and cleaned up.I have met a few people from China Tsinghua University and Ministry of Science and Tech. and this is their response too and Chinese really respect elders and buy from companies that have stood the test of time and also sell to the companies that have stood the test of time.

  4. Lou P Says:

    I set up contract manufacturing arrangements for seven years and agree with almost everything you wrote.

    My Chinese partners understood where I stood and where their role was. My American customers let me do all the work and depended on my deliveries without trying to inform me how to deal with our foreign manufacturers.

    And, we very carefully chose the appropriate products to outsource!

  5. Cosimo Says:

    Dear Yue,

    surely you know what you write. The situation with Chinese business seems somehow to me like the situation in Italy during the 60es. Being not well organized, not respecting the rules, trying to get the benefit for the single instead for the community etc etc.

    Nevertheless, I would like to turn the question around. I am certain there are several examples of good cooperation China-rest of the world, what are in this case your advices to get a good and durable cooperation ?

    Thanks a lot for your time.
    Kind regards,

    Cosimo Caraglia

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