6 Tips for successful business in China

Bussiness in China

#1 THE SMALL PRINT IS WRITTEN IN MANDARIN AND THEY SPEAK CHINESE AMONGST THEMSELVES.

 If you want to import from China you should know this:  this nation is the merchant’s “paradise.” The numbers expressed by the Ministry of Commerce of the People’s Republic of China confirms this: from January to April, 2018, the total value of imports and exports from China were 1,414.71 billion dollars (USD), this value has an alleged 16.5% year-on-year increase.

However, there’s data, information… that can only be obtained by experience, and mostly: from bad experiences. Someone had to take the first bite, right? It was a brave soul, who in this case got lucky, but had to take the risk! The same thing happens with business in China. Many took the risk blindly and went through countless obstacles to see the business succeed. Here, they share some tips of things not to do based on previous mistakes. And we step ahead to the end: THE LANGUAGE. Understanding what they’re talking about is decisive between closing a good or a bad business deal.

1.    The small print is written in Chinese. This means that: contracts can be written in English or in Chinese. However, in the case of a conflict, the contract in Chinese will be the one considered valid, so pay close attention to translations. It is important to have a team that masters the language efficiently, not only to translate but also to serve as interpreters. You should always ask and be sure you read and clarify each of the sections outlined in the contract.

Chinese business culture: According to the official page of the Ministry of Commerce of the People’s Republic of China, the judicial system does not guarantee a fair trial for foreign citizens. There is a high degree of corruption in the country, especially within the CCP.

It also explains that the language used to implement justice is: Mandarin.

China has several arbitration institutions, such as the China International Economic and Trade Arbitration Commission (CIETAC).  Only those litigations presented as an “external factor” can be arbitrated outside of China. For more information on the Arbitration Law.

2.    There’s nothing like understanding the Chinese language and not seeming to do so. Here’s an anecdote shared by a wholesale supplier of Sport’s equipment for Latin America: “In one of the visits to the fair, we stopped at a stand selling fishing kits. One of the salesmen gave me an initial price. The other associate argued with him in Chinese telling him he had given us too low a price. The salesmen responded: “Don’t worry, I’ll charge him double for everything else”… Our translator who had spoken to them only in English, responded in Chinese: “We will not do business with you because you are not trustworthy”… “they were amazed.” Certainly there is someone at every stand that will serve as a speaker, but they’re not always informed in the subject… that’s why it’s ideal to have someone who speaks Chinese (Mandarin preferably) because it’s the language they speak most amongst themselves: Being able to understand those mumbles and conversations is beneficial. “There are some ill-intended merchants that seek to take advantage of foreigners with little experience. Not all of them! But it’s good to stay alert for the signals,” advised the merchant.

3.    Some people swear that China only sells at minimum one shipping container per product: False! There are suppliers that sell smaller quantities. Usually it’s through companies that group several factories and buy merchandise under their name: known as trading. Although the prices aren’t as low as through factories themselves, the advantage is that it offers assorted merchandise in fewer quantities.

4.    Alibaba is a website that can be used as a window. Doing business directly through their site is not recommended if you do not have prior experience with the Chinese market. The first contact by excellence should be in a fair. Among the most popular is the Canton Fair. It’s safe to say that it is the largest catalogue of all that is “Made in China.” It’s the surest bet: The meeting is personal, directly with the providers, and with samples of the products. It’s even important to consider their behavior, their comments, etc.

5.    It’s very difficult to work in China without proper counseling. Although the first encounter was presence-based, once the person “goes home,” the business is in the hands of the suppliers who will do things their way. Even the quality or the characteristics of the product can change, one thing is what they show you, another what they send you. That’s why it’s key to check the merchandise before delivery. The norms and certifications are a point in favor, but you need to understand what they mean (the following link is a downloadable with the definitions). Another aspect that gives confidence is the company’s trajectory and their years of experience in the field. However, it’s always advisable to rely on a person who remains in direct contact, guiding the supplier and constantly monitoring them.

6.    When the goal is to CREATE A BRAND, or import a specific brand exclusively… the advice is to “secure it.” In other words: register it so that no one else can commercialize that brand. We spoke to a shoe-importing company for Latin America who shared their experience: “In our case, the brand already existed in China. It wasn’t very common in the region, so we were the first to bring it in. We registered the name in the Autonomous Service for Intellectual Property (SAPI – for its acronym in Spanish). In this manner, we prevented a future “take-away,” because it’s something that can happen. Simply because someone else is interested in commercializing the brand and offers a lower price… or the Chinese suppliers are tempted to commercialize it directly if they see an increase in sales and an optimum growth of the brand.”

Download our guide to NORMS AND CERTIFICATIONS to understand what they mean, and our comparative table of Chinese Laws vs. Western Laws.

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