china usa business
DESCRIPTION
This presentation give a basic information of doing business in China. It also show the culture difference between China and USATRANSCRIPT
Doing Business in China
Anything is Possible
(Nothing is Easy)
Bio
USA Today/NASDAQ/Ernst & Young Entrepreneur of the Year recipient,
successful USA Entrepreneur since 1982 and experienced China Entrepreneur since 2004
TopicsCase Study
Chinese Business Culture
The importance of ‘Guanxi’
China’s Regulatory Landscape
Chinese Economic and Cultural Facts
China FactsWorlds Second Largest Economy
Average Double Digit GDP growth >20 years
1.3 billion Population
Excellent Infrastructure
Nascent Business Environment
Changing Economic Landscape
Case Study
Koncept International, Inc.Founded in 2004 by Kuang Peng (George) and Jeff Holtmeier
Developed global VoIP platform
Koncept Shenzhen Technology, Ltd. (PRC entity) and Koncept International, Inc. (DE-C) owned by an off shore holding SPV
R&D, Customer Support in China, Sales/Finance in US
Customers on 6 continents within 3 years
Case StudyChallenges
Cultural dynamics
Building trust
Operational/Managerial differences
Time zone management
Lack of formal plans
Does ‘yes’ mean no?
Case StudyBenefits
100 person R&D team at ~15% of USA cost
Young, smart, hard working
Customer focused
Low taxes (special economic zone)
Low OPEX
China FactsMore than 100 cities of more than 1m population
6 million fresh University graduates from 200942% with engineering, math or science degree
Labor force >800 million
Worlds largest auto market-17m in 2010
China and HK own nearly ~$1t of US treasuries
Chinese save >50% of income
There are more than 420m Internet users in China
Only 140k Lawyers in China!
Business Culture
Chinese Business CultureChina Cultural (Expression) USA
Spiral Logic Linear
Difficult to say no Disagreement Argumentative
Indirect Communication Explicit, Direct
Subtle, Non-verbal Honesty Overt
“We” oriented Self “I” oriented
Context of the moment Thinking Rule based (Laws)
Preservation of harmony Individual Need for achievement
Guanxi, long lasting Business Relationship Superficial
Loose Meeting Time Rigid
Win-Win Conflict Results Winner and Loser
Chinese Business CultureChina Value Differences USA
Relationship first Interpersonal Economics first
Virtue Humility Sign of weakness
Accountable by generation Time Horizon Accountable by the quarter
Seniority, Wisdom, Ability Command Respect Success, Achievement, $
Not righteous to bully Strong & Weak WIN! Weak preyed upon
Strong Discipline Depends on person
Openly receptive but… Openness More open
Long memory, need to exonerate
Shame Tends to be superseded by business priorities
Mixed: business, individual,nationalistic
Priorities Tend to be all business
Chinese Business CultureBasic Etiquette
Business (Name) Cards
Use of names
Displaying emotion
Guest-Host relations
Using intermediaries
Lunch, Dinner, Socializing
Guanxi‘Relationships’
Chinese rely on Guanxi
Critical to business success
Build trust with Chinese partner
Invest in the relationship
Chinese prefer to do business with ‘friend’
Once Guanxi is established, more doors open
GuanxiHow to build
Treat them nice
Do what you say
Be dependable, reliable (like a friend)
Frequent contact to establish bond
Western companies need to ‘invest’
GuanxiIs Not
Bribery
A replacement for how to conduct business
A reason to avoid proper due diligence
Something that a Foreigner can learn
Transferrable from an Employee
China FactsChina is almost identical in land size to the US
An estimated 3-500m people are unaccounted
Chinese invented paper, ice-cream, compass, gunpowder, printing, and toilet paper (1300)
Great wall is 5,000 km long and built 2,500 yrs ago
Mandarin is spoken by more people than any other language (there are 200 dialects in China)
China has more English speakers than USA
Regulatory Matters
Regulatory Matters
China’s laws
Opaque
Inconsistent
Often arbitrary
Unpredictable
Constantly changing
Regulatory Matters
Different than USA
Impacts how you do business
Every industry has unique regulations
Central, Provincial and Local regulations
Change in regulations occur quickly
Businesses do not rely on lawyers like USA
Regulatory MattersChina Structures
Representative Office
Joint Venture
Wholly Foreign Owned Enterprise (WFOE)
Foreign Invested Commercial Enterprise
China’s ConstitutionCHAPTER II. THE FUNDAMENTAL RIGHTS
AND DUTIES OF CITIZENS
Article 35. Citizens of the People's Republic of China enjoy freedom of speech, of the press, of assembly, of association, of procession and of demonstration.
Article 36. Citizens of the People's Republic of China enjoy freedom of religious belief. No state organ, public organization or individual may compel citizens to believe in, or not to believe in, any religion; nor may they discriminate against citizens who believe in, or do not believe in, any religion….
Article 51. The exercise by citizens of the People's Republic of China of their freedoms and rights may not infringe upon the interests of the state, of society and of the collective, or upon the lawful freedoms and rights of other citizens…..
More China Facts‘Show me the Money’
China 2009 USA
$4.9 T GDP $14 T
$7,500 GDP per Capita $47,000
$428 B Debt $13 T
$891 B Consumption $8 T
More China Facts‘Show me the Money’
China has 128 Billionaires in 2009 to USA 403
In 2000, China had 2
China has 477k Millionaires in 2009, 4th in the world
Bentley will sell >400 cars in China this year
BMW sales in China have surpassed Germany
Mercedes will sell 300k units/year by 2012
Audi will sell 200k in ‘10, doubling sales of ‘08
Chinese Food
Chinese Food
Chinese Food
Chinese Food
Chinese Cities
Shenzhen
ShenzhenPopulation: 13,300,000
Deng Xiaoping ‘Capitalism Test Market’ 1978
One of the fastest growing cities in the world
90% of the computer parts sold in the world are made here
Pioneer in liberalization, both in terms of trade and politics
Beneficial policy to attract foreign investment
Lower cost of living than Hong Kong
Beijing
BeijingPopulation: 17,430,000
Political, cultural and educational nerve center of China
Major transportation hub of the country
Spent $40b in Beijing for 2008 Olympics
Adding 15,000 new cars per week. 1 million in 2010
Shanghai
ShanghaiPopulation: 18,884,600
Became the largest cargo port in the world in 2005.
Center of finance and trade in mainland China
Has 56,347 foreign entities as of March 2010
Attracts 10.09% of foreign investment in China
Preparing to allow foreign companies to list shares and sell bonds in the domestic financial markets
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