Industry Experts and China Business

ABOVE: Have you ever seen icebreakers? These two are old, new hi-tech icebreakers can go top of ice to break it. These are from Helsinki, my other home town. Photo gallery below.


Industry Experts and China Business
BUSINESS CULTURE KNOWLEDGE

RUSH INTO CHINESE markets continues and China related consultants have lots to do. Companies need macro level and industrial level data. Consultants can bring it and help to analyse it. But that is not enough.

For China strategy, companies need to understand far more than match of product into certain segment, or positioning products in China market.

Companies need to:
- understand detailed business process in China
- understand industrial purchasing behavior in China
- know competitive environment in China
- how to build image in China
- how to build social asset called Guanxi

These needs are influenced by Chinese culture, adding complexity.

CHINA CONSULTANTS
Professional China consulting is still coming more from from west. Often western China consultants lack real on-work China knowledge, which makes them to stay conveniently on macro and industrial data level. Consultants can't contribute much for practical business operation, where Chinese culture plays integrated role.

COMPANIES WANT CHINA BUSINESS
Foreigners responsible for evaluating, analyzing or activating China opportunities, are often not enough open minded. On surface China is modern and their thinking seems to be narrowed by their own former experiences in similar looking environments. This limits their ability to catch opportunities in China.

FAILURES HAPPEN
Foreigners commonly lack understanding of the far east. They seldom distinguish difference between mainland China and other Chinese culture dominated areas in Asia.

Many companies fail to enter into China business, because they didn't get-prepared. They underestimate the role of local business practises and culture in China. Doing business transactions or building partnerships in China is not similarly rational as in the west.

Of course China makes progress. On surface Chinese business environment gives impression that things are already done very western way. WTO agreement was made long ago. But once you start working with sales and contracts, you will learn about difference.

This is not to mystify China, this is situation in mainland China. Within European Union we recognize market differences based on cultures and regulations. Mainland China is further and more different, and often behind a language barrier.

For SMEs, entering China market is especially difficult because of their limited finance to support the starting phase f.ex to make company's name known among potential customers.

ROLE OF HONG KONG AND SINGAPORE
I still meet companies which try to build and manage their China business via Hong Kong or Singapore. Western companies used to enter China through them due to their better English communications skills. People might be Chinese but their native language is Cantonese, they need to study Chinese Mandarin later. Result is limited capability, for instance in handling Mandarin indirect communication.

Hongkongers and Singaporeans live in totally different business environment compared to mainland China. Theirs has laws, regulations and rules. This doesn't prepare Hongkongers or Singaporeans to meet mainland Chinese in privileged way. They can only learn mainland Chinese way in the mainland.

HK and Singapore lost their priviledge position in doing business within China already 10 years ago. With WTO agreement new China is getting more sophisticated, and wants direct connections with the world without middlemen.

Picture:
Icebreakers Voima and Apu.

Icebreakers are like consultants, enablers. After company has entered to China, learning local business culture, Chinese way, and industry specifics will take time. Like ice, illusions will get broken.

Hongkongers and Singaporeans have largely lost their advantage in mainland China. They used to be middlemen with attitude problem towards mainland Chinese, whom they looked down to play big. Mainland Chinese are sensitive and notice lack of respect which has consequences.

HOWEVER Hongkongers and Singaporeans have accumulated experiences in service industries such as hotels, house management, elderly homes, education, hospitals, which all are still weak in mainland China. They should take leading role and become service builders and managers, and prevent becoming marginalized in the mainland, and delay their salary inflation.

CHINA CONSULTANT CHALLENGE 1.
China has its rules for practical business operations, like office establishment, recruiting people, opening bank account, book keeping, tax payments, product homologation, customs etc. But rules are not complete and often things are not done accordingly.

There are gray areas, lack of rules and hidden tricks. Then, Guanxi plays overall major role, f.ex. in such as public biddings. This is why industry knowledge supported by culture understanding is a must for doing business in China.

CHINA CONSULTANT CHALLENGE 2.
Western companies are attracted by the scale in China. Their management in HQs should do more efforts to understand business complexity within China. How to increase their understanding of Chinese business behavior? How could they learn the crucial industry insights?

Mainland Chinese, who build foreign business in China, are seldom able to convey accurate information to their HQs abroad.

This can cause bad decisions in product features, lack of product localization, wrong pricing, delay in timing, off-the-point questions and report requests, lack of support resources. Overall slowness in making decisions.

EPILOG
There is a gap between companies' needs and offered consulting services on China. Western consultants are handicaps with Chinese business culture and lack deep expertise of industries and Guanxi.

Companies make their China entry decisions based on macro/industry information and suddenly appeared opportunity for sales project. They don't get deeper insight for making their China strategy.

Chinese culture workshops and cross cultural trainings help to learn etiquette. Helpful but on the surface only. Real life situations in China business are more complex, sensitive, refined, detail, and tricky.

There is a risk ending up to do business in fog with limited information. Chinese industry insiders (mainlanders) can have a better play in the market, but they often lack communication skills to interpret their expertise into western understanding.

For foreigners the challenge is how to equip China business with industry expertise, communication skills and capable, results oriented personnel. How to maintain motivation. China business consultants should also get into these real issues. Ask for success stories from your China consultant.


BeijingMan aka Kippo

List of BeijingMan Postings

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All pictures in this post were taken by Canon 20D with EF-S 10-22mm zoom. Click to enlarge.

Above-1: Helsinki. In summertime Finland's icebreakers are parked at Satamakatu in Katajanokka, Helsinki. These six ships look impressive. First two are Voima and Apu, next Otso and Kontio, then Urho and Sisu. Names are related to power, help, bear, guts.

What icebreaker crews do in summertime? When no ice to break, they usually go on strike for better salary and benefits...

Above-2: Helsinki. Postcards to friends at icebreakers find their way via these mailboxes at gate. Sisu didn't have a mailbox, creating another mystery around Finnish icebreakers. Has somebody picked it up for a tango?

Above-3: Helsinki. During summertime Finnish icebreakers are parked in front of Ministry of Foreign Affairs at Katajanokka.

Above-4: Helsinki. After icebreakers I felt filled with energy and went to shoot a few pictures nearby. Pictures 4 to 30 I took by "drive and shoot" method, all from drivers seat, within an hour. This is Luotsikatu in Katajanokka, Helsinki.

Above-5: Helsinki. Old, but inside can be very modern. Laivastokatu in Katajanokka, Helsinki.

Above-6: Helsinki. Yes, very square. Laivastokatu in Katajanokka, Helsinki.

Above-7: Helsinki. Have sea view? Yes. Kruunuvuorenkatu in Katajanokka, Helsinki.

Above-8: Helsinki. Heavy task for these four some 50-100 years.

Above-9: Helsinki. This beauty will not participate to Hainan beauty contest in Sanya. House is located at Korkeavuorenkatu, Helsinki.

Above-10: Helsinki. Some Hollywood movies have been made around this house in Rahapajankatu, Helsinki, Katajanokka. House was acting as being in Moscow.

Above-11: Helsinki. Not symmetric but attractive. Rahapajankatu, Helsinki, Katajanokka.

Above-12: Helsinki. Red, red, red! But not too red!

Above-13: Helsinki. I think Prince Charles has got something right when he talks about need for better job by today's architects.

Above-14: Helsinki. We are in gray area. Liisankatu at Kruunuhaka, Helsinki.

Above-15: Helsinki. An apartment with sea view? Kruunuvuorenkatu at Katajanokka, Helsinki.

Above-16: Helsinki. Yes, this will do. Maurinkatu at Kruunuhaka, Helsinki.

Above-17: Helsinki. Lutheran Cathedral at Helsinki Senate Square.

Above-18: Helsinki. Finnish Government at Senate Square. Mister Prime Minister has his work room on second floor, to the right, end of corridoor and right.

Above-19: Helsinki. University of Helsinki at Senate Square, opposite to Finnish Government.

Above-20: Helsinki. The National Library of Finland aka Helsinki University Library at Unioninkatu, near Senate Square.

Above-21: Helsinki. This is part of Helsinki University. Snellmaninkatu, Helsinki.

Above-22: Helsinki. Bank of Finland near Senate Square. This statue has still holes caused by Soviet bombardings during WWII. Snellmaninkatu, Helsinki.

Above-23: Helsinki. National Archives of Finland at Rauhankatu, near Senate Square.

Above-24: Helsinki. House of the Estates near Senate Square, opposite to Bank of Finland, at Snellmaninkatu, Helsinki.

Above-25: Helsinki. Swedish Theater at Mannerheimintie, Helsinki, near Stockmann department store.

Above-26: Helsinki. Department of Astronomy part of University of Helsinki. Kopernikuksentie at Tähtitorninmäki, Helsinki.

Above-27: Helsinki. Some grey and blue at Kanavakatu, Katajanokka, Helsinki.

Above-28: Helsinki. This is Makkaratalo. It looks so ugly that it has become a legend and is now considered somehow strangely attractive. Kaivokatu, Helsinki center.

Above-29: Helsinki. Modern apartment building at Kesäkatu near Sibelius Monument, in Helsinki. Excellent sea view from top floors. One day will...

Above-30: Helsinki. Sea is still cold. These vehicles will take you to islands and summer places. View from Kanavanranta at Katajanokka, Helsinki.


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© BeijingMan aka Kippo 2008, 2009