Relationships - The Key To Business Success In China

Expert China consultant Tim Nash shares his views on some of the barriers to organisations wanting to access this competitive marketplace and why relationships are the key to business success there.

China is the world’s largest economy with a middle class greater than the entire population of the United States, yet nearly half of foreign business in China fail within two years and many of those that do survive fail to thrive.

Why Businesses Struggle To Succeed In China

How can this be?  Foreign businesses that go to China tend to be well-established, well-led and well-respected.  Generally, they have also successfully expanded into other markets.  If the issue were resources, companies like Home Depot, eBay and Media Markt would still be in China.

But the issue is not technical: it’s relational.

Examples of corporate successes and failures in China have been well-documented, and extensive lists of dos and don’ts have been compiled – all underlying the truth that China is not just another market, it’s another kind of market.

The trouble is that in practice most foreign businesses become so bewildered by the complexities and so afraid of getting it wrong that they either do nothing or else they delegate “China” to someone else: a junior or an external agency.  Unfortunately none of these approaches produces encouraging results.

Thankfully, beneath the technical complexities of business success with China lies a very simple key: a shift of attitude.

How To Succeed In Chinese Markets

Apple, Ikea and Volkswagen have succeeded in China where others have failed because they were prepared to move themselves rather than expecting China to move for them.  Apple moved from the simple aluminium and white finishes that they prized on their iPhones to the silver and gold that the Chinese valued; Ikea moved from simply providing furnishings to showing its Chinese customers how to decorate their homes; instead of looking for a factory that would build cars cheaply for them, Volkswagen instead found a partner that would build cars profitably with them in China.

Basic sales training tells us that ‘people buy from people first’ and likewise in China people do business with those they like and trust.  So the first step is to be personable – and begins with taking a genuine human interest.

In a rapidly changing economic environment a personal commitment provides much greater business security that a contact.  So the second step is to be dependable – and keeping regular contact would be a good start.

Underneath the familiar win-win principle in China is something much simpler and more fundamental – the desire for friendship, because we both trust and influence our friends more than our enemies.  So the third step is to seek to be not just a partner, but a friend.

A stubbed toe may not be a vital organ but it can certainly hamper the performance of the whole body.  Similarly, your China venture thrives or fails will depend not on the collective technical capabilities of the partners but on how effectively they work together.

If you want to succeed in business with China, focus on the strength of your relationships and the rest will follow.

We are always interested in hearing your experience of doing business in overseas markets. Share your thoughts on Tim’s post below using the comments, or get in touch with Rod McInnes if you would like to contribute a blog post on your experience in other regions of the world.

Tags: adapting business, business advice, overseas markets