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Published on March 24, 2008

Mistake #1 Be impatient

When it comes to doing business in China, the relationship comes first, business second. Some people joke that PRC stands for Patience, Relationship, Contract. Many foreign companies are impatient and walk away too soon - missing out on valuable business opportunities.

Mistake #2 Undervalue your local staff

To succeed in China you need a strong local management team and with the current strong demand for skilled labour, your executives will find it tempting to leave. Chinese workers leaving multinationals say the main reason they left was that they felt undervalued. You must give them a good reason to want to stay - otherwise they will go.

Mistake #3 Be badly prepared

It is amazing how many companies go to China without doing their homework. Some people do not bother to learn the simple lessons of etiquette, nor do they study the local market - to their eventual loss.

Mistake #4 Assume that China is cheap

The days of cheap local labour and materials are gone. There are also many hidden costs in China, which are part of the investment you must make as part of building good relationships. Be unrealistic about this - and you will find that you go out of business quickly.

Mistake #5 Do not try to learn the language

Even if you lack the patience or ability to become fluent in the Chinese language, it is important to learn a few simple words and phrases. Refusing to learn the language means that you will always struggle to understand the people you are working with and that will hold you back.

Mistake #6 Give away too much information

It is tough competing in China. Local producers know the market better, have better supply chains and usually a lower cost base. You need to protect your major asset, which is intellectual property. Your competitive advantage is that you have a better brand or better process - don't give that away.

Mistake #7 Be slow to react to the market

The market is changing very rapidly in China. Incomes are rising fast and people are becoming more adventurous in their tastes. Just because something worked last week, it does not mean it will work next week.

Mistake #8 Overstretch yourself

We all know companies that tried to expand too fast and ran into trouble. In China this happens all the time, simply because the pace of business expansion is so rapid.

Mistake #9 Try to go it alone

Just as goodwill and good relationships will take you a long way in China, the opposite also applies. Many of the people you are dealing with in China have close connections with one another. Offending important figures can lead to you being frozen out of business.

Mistake #10 Break the local laws

This would seem an obvious mistake, but a lot of people are still making it. The laws are changing fast, as the Chinese government becomes more conscious of social issues and the environment and it is easy to get caught out - if you do not study the trends and plan ahead.

 

In summary, making mistakes in business in China are not all that different from the kind that get you into trouble elsewhere. It is just that it is bigger and the pace is faster and you may fall harder.

Prasong Uthaisangchai

Senior Executive Vice President and Director of International Banking Group, Bangkok Bank

 www.bangkokbank.com

The Nation