DOING BUSINESS IN CHINA



In January I stood in the Great Hall of the People in Beijing and listened as British Prime Minister Gordon Brown and Chinese Premier Wen Jiabao talked of the best ever relations between our two countries.

The PM held out the prospect of doubling UK exports to the world's fastest growing economy by 2010 as overall trade sees a 50% increase.  Meanwhile, Premier Wen expressed his satisfaction at the momentum behind improving Sino-British relations.

This new "comprehensive strategic partnership" clearly offers huge opportunity for UK design.  I had been invited to address business leaders on "Partnership through Innovation", hopefully offering some insight into how all that potential can best be grasped.  

Tangerine has been working with two Chinese manufacturing giants over the last couple of years, establishing very positive working partnerships.  Our relationship with 'Konka' was established in 2007, and we are currently working with one of China's biggest R&D developers and manufacturers of telecommunication products (mobile and network products).

Our first forays into China followed 16 years working in the Far East with manufacturers in Korea, Taiwan and occasionally Japan.  Although each of these nations is very different, there are common traits and our experience in the region was invaluable in understanding the Chinese market.  We knew how important it was to go the extra mile, to listen and guide rather than push, and the importance too of an occasional evening of Karaoke.
 
China's growth is truly awesome.  Nationally, GDP is increasing at 11%, but many of the businesses I have visited typically quote 60%!  This extraordinary expansion is driven by the demand for high value items from China's new rich. It is also a measure of how successful China has become in targeting high margin industries.

I have met many design consultancy heads whose workforce has risen from just five to 200 employees in a matter of a few years.  I would caution anyone from thinking they can just walk in and match this kind of growth, not least because Chinese margins are tighter than we would expect.  But this, to my mind, is one of the most exciting parts of the world to be growing a business right now.

The Chinese tend to place great value on reputation and personal relationships.  All of the companies I have worked with are ambitious, intelligent, diligent and thorough.  But they also are cautious, and think very carefully about the way in which you can best add value to their business.  They will want to know exactly how you can help them reach potential clients and markets in Europe.

Ex-pats are only too familiar with the rapid growth, the smog, the long working days and the patience required to build lasting relationships.  They will tell you how many European business executives fail in China because they don't find the right balance between bringing difference and fitting in.  Never underestimate the importance of Chinese culture and history.

If you haven't worked in Asia and are serious about growing a presence there, then your first step is almost certainly to contact officials at UK Trade and Invest.  China, not surprisingly, is one of UKTI's priority markets and they provide companies with a wealth of knowledge, advice and practical support.   UKTI operate a network of International Trade Teams in the English regions while in China there are Investment Teams at the British Embassy and Consulates-General.  The Union flag and associated pomp and ceremony seem to go down very well – a good fit with Chinese culture.  

The China-Britain Business Council (CBBC) will help arrange meetings with potential clients.  Consultancies from the UK are also still something of a novelty and you have a good chance of getting to see someone.  But converting introductions into business will take time and commitment.  Be prepared to go back again and again, write proposals and then more proposals. Also, be prepared to travel a lot.  China is a huge continent and it will take three or four hours to fly between the major cities.

But if you think that sounds a tough job, the Chinese work-ethic is something to behold.  Many senior staff often spend half the year in Europe and the other half in their employer's city -  while their wife and kids live in another city altogether.  It is a hard slog to enter this market and, if you do crack it, the hard slog won't end there.

Finally many of you will want to know how you can ensure you get paid.  I have heard stories from Korean design consultancies that they have not always received all money invoiced. Others always ask for 30 to 50% up front, and deposit payments are not unusual.  At Tangerine we have found that prompt payment does follow firm contract negotiation and a thorough appraisal of our work.

I cannot be certain that my experiences will parallel yours but one thing I do know.  If you make it in China, along with any business success will come an experience that will change your life.



This article has been republished with permission from the author. It originally appeared in Design Week Magazine.
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