powerpoint presentation · title: powerpoint presentation author: ben newman created date:...

Understanding China

Ben Newman Beijing Consulting Group

Understanding China

Introduction

China in Numbers

Doing Business in China

Culture in Business (Business in Culture)

China: Interesting Facts

China produces 66% of the world's garlic.

400 different varieties of kiwi fruit in China (used for

over 700 years)

KFC first translated its advertising slogan "finger lickin'

good" into Chinese, it came out as "eat your fingers

off".

35 children are born every minute in China.

About 700,000 engineers graduate annually

42,000 characters in Chinese language. An adult is

only expected to know 5,000 of them.

Ost trifft West

刘杨 Yang Liu

Graphic Designer

Born in Beijing, 1976.

Moved to Germany in 1990.

“I am very German in my approach to work. But when it comes to emotional decisions and human interaction, I am more Chinese.”

Cultural Impressions

Me

Lifestyle

7

Daily Meals

Transport

Children

Queues

11

Parties

12

In a Restaurant

13

Travelling

China in Numbers

1 BILLION consumers by 2030 as urbanisation continues

500,000,000 lifted out of

poverty since 1985

‘Workshop of the World’

Changing of the Times

Economic Transition

Open

Economy

Market

Economy

Urban

Closed

Economy

Planned

Economy

Rural

Source: http://news.sohu.com/20120823/n351314404.shtml

China’s ODI

7 Strategic Industries

From Low-End Manufacturing to High-End, Services and Infrastructure

China Inward FDI (2014) ● Energy conservation and environmental protection

● Next generation IT

● Biotechnology

● High-end equipment manufacturing

● New energy

● New materials

● Clean energy vehicles

FDI in China

56% 33%

11%

Services

Manufacturing

Other

FDI TREND

Joint Ventures PREFERRED TO TRANSFER

TECHNOLOGY & KNOWLEDGE

STRONG INFLUX OF

Foreign Experts TO DRIVE QUALITY, SAFETY

AND PRODUCTIVITY

Changing Face of EXPATRIATES MORE LOCAL HIRES

SINGLES NATIONALISING OF

MANAGERS Construction OF OFFICES IN CHINA

DIFFICULT TO ATTRACT & RETAIN STAFF IN 2ND &

3RD TIER CITIES

1,200 R&D Centres set up in China by

Foreign Companies

Overseas Companies

Moving Inland Or To Remote Locations

INDUSTRIES FDI GROWTH 2011

INCREASED

STRENGTH &THREAT

OF Chinese COMPETITORS

Lack OF INTELLECTUAL

PROPERTY

PROTECTION

HIGH INFLATION, RISING LABOUR &

Raw Material COSTS

HEALTH RISKS

POLLUTION PANDEMICS

Food Safety

CONSTANTLY

Changing Regulations, LICENCING & LEGAL

ENVIRONMENT

Overseas Companies

Doing Business in

China

Numbers vs. Reality

“If Only Every Chinese Person

Bought One Bottle of My Beer …”

China is not ONE big market

Sum of many mini-markets

(geography, language, social

background, finances and culture).

China: One Country?

4 Municipalities

23 Provinces & Municipilaties

5 Autonomous Regions

2 Special Administrative Regions (SAR)

China: One Country?

North East China (3 provinces)

East China (10 provinces/municipalities)

Central China (6 provinces)

West China (13 provinces/municipalities/autonomous regions )

SAR (2)

North East China (3 provinces)

East China

(10

provinces)

Central China (6 provinces)

West China

(13 provinces)

Business in China:

Opportunities

Urbanization and Mobility

Wealth

Consumer Sophistication

Use of Internet

Services Sector

Growing …

[Source: CBBC, Leeds University, UKTI]

Challenges

Challenges

With time and patience the mulberry leaf becomes a silk gown.

- Chinese proverb

Challenges

Operating Practices

Unfamiliarity

Intense Competition

Scale/Pace of Change

Different Cost base

Steep Learning Curve - Unforgiving

Regulations/Bureaucracy

Strategic Plan

Decide Entry Strategy

Understand Government

Prepare for Culture Gap

Importance of relationships NOT contracts

Understand legal system and IPR

Find the right local partner

Be flexible and adapt

Expect delayed pay-off

Business in China:

Success Factors

Culture in Business (Business in Culture)

33

Punctuality

34

Contacts

35

Annoyance

36

Opinions

37

Solving Problems

38

The Boss

Influences

Chinese Culture

History Women Elders

Language Education Confucius

Family Zhongguo Patriotism

Behaviours

Chinese Culture

Patience Group Hierarchy

Guanxi Modesty Decisions

Bonding Face Contracts

• Too much concern for environment

and safety

• Too honest

Chinese View:

Overseas Staff

Equality

Safety

Systematic

Individualism

Rigid

Superior

• Good at planning and filing

• Family before work

• Poor reaction to change

• Lack of trust

Common Mistakes

Ill-prepared

Interpreter

Focus on protocols and not matter at hand

Believe words at face value

Over-reliance on “guanxi”

No person-to-person links

Losing temper

Rules & Relationships

Universal and clear Not universal and

often unclear

Binding and

detailed contract

Contract can be

changed

Focus on fairness Focus on

relationships

Rules & Relationships

How can I trust

the Chinese?

They always

help their

friends

How can I trust

Westerners?

They don’t

even help their

friends

关系 Guanxi

2 Way Street

What is it?

Built Over Time Not Free or Unlimited

Comfort Zone

Important?

Need Verification Bonus vs. replacement

Care

How to …

Frequent Contact Walk a mile … Investment

Negotiation: Techniques

Legal firm with presence in China

Independent Advice

Intellectual Property - advice

Halve expectations, double budget

Grey issues

Be firm, creative

Be prepared to say no

Business Etiquette

Good business relationships and trust

Business meetings start promptly - senior person first. Handshake

Business cards essential

Simple Mandarin phrases

Never begin eating or drinking until you host does

Dinner speeches and frequent toasts are standard;

Remain patient and polite.

Speak in short, simple, and jargon-free sentences.

Trust

Handshake

Business cards

Basic Mandarin Phrases

Host begins a meal – toasts, speeches

Patience

Summary: Profile for Success

Leave your preconceptions at home;

Keep hold of your business sense;

Do your homework;

Patience is a virtue;

Long-term approach;

Be flexible;

Quality independent legal/professional advice;

Specialist legal advice on IPR:

Due diligence;

Remember personal relationships.

谢谢 Thank You!

Beijing Suite 1206, Zhubang Office

98 Bali Zhuang Xili Chaoyang District

Beijing 100025 China Tel: +86 (0)10 85866220/6386/6387

Fax: +86 (0)10 8586 6221

Shanghai Tel: +86 (0)21 6445 4879

Fax: +86 (0)21 6445 4976

info@bjconsultinggroup.com www.bjconsultinggroup.com