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
500,000,000 lifted out of poverty since 1985 1 BILLION consumers by 2030 as urbanisation continues
Changing of the Times Workshop of the World
Economic Transition Planned Economy Closed Economy Rural Market Economy Open Economy Urban
China s ODI Source: http://news.sohu.com/20120823/n351314404.shtml
FDI in China 7 Strategic Industries Energy conservation and environmental protection Next generation IT China Inward FDI (2014) 11% Biotechnology High-end equipment manufacturing New energy New materials Clean energy vehicles 33% 56% Services Manufacturing Other
Overseas Companies INDUSTRIES FDI GROWTH 2011 FDI TREND Joint Ventures PREFERRED TO TRANSFER TECHNOLOGY & KNOWLEDGE Moving Inland Or To Remote Locations 1,200 R&D Centres set up in China by Foreign Companies Construction OF OFFICES IN CHINA DIFFICULT TO ATTRACT & RETAIN STAFF IN 2ND & 3RD TIER CITIES STRONG INFLUX OF Foreign Experts TO DRIVE QUALITY, SAFETY AND PRODUCTIVITY Changing Face of EXPATRIATES MORE LOCAL HIRES SINGLES NATIONALISING OF MANAGERS
Overseas Companies CONSTANTLY Changing Regulations, LICENCING & LEGAL ENVIRONMENT INCREASED STRENGTH &THREAT OF Chinese COMPETITORS HEALTH RISKS POLLUTION PANDEMICS Food Safety Lack OF INTELLECTUAL PROPERTY PROTECTION HIGH INFLATION, RISING LABOUR & Raw Material COSTS
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) West China (13 provinces) Central China (6 provinces) East China (10 provinces)
Business in China: Opportunities Growing Urbanization and Mobility Wealth Consumer Sophistication Use of Internet Services Sector
Challenges [Source: CBBC, Leeds University, UKTI]
Challenges With time and patience the mulberry leaf becomes a silk gown. - Chinese proverb
Challenges Unfamiliarity Operating Practices Intense Competition Scale/Pace of Change Different Cost base Steep Learning Curve - Unforgiving Regulations/Bureaucracy
Business in China: Success Factors 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
Culture in Business (Business in Culture)
Punctuality 33
Contacts 34
Annoyance 35
Opinions 36
Solving Problems 37
The Boss 38
Chinese Culture Influences History Women Elders Language Education Confucius Family Zhongguo Patriotism
Chinese Culture Behaviours Patience Group Hierarchy Guanxi Modesty Decisions Bonding Face Contracts
Chinese View: Overseas Staff Equality Safety Systematic Individualism Rigid Superior Too honest Too much concern for environment and safety Good at planning and filing Family before work Poor reaction to change Lack of trust
Common Mistakes Interpreter Ill-prepared 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 Binding and detailed contract Focus on fairness Not universal and often unclear Contract can be changed 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 What is it? 2 Way Street Built Over Time Not Free or Unlimited Important? Comfort Zone Need Verification Bonus vs. replacement How to Care Frequent Contact Walk a mile Investment
Negotiation: Techniques Independent Advice Legal firm with presence in China Intellectual Property - advice Halve expectations, double budget Grey issues Be firm, creative Be prepared to say no
Business Etiquette 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.
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