Take a look of the analogy
of sun rise at dawn: as it gradually ascends, it will soon be high above,
shining throughout the world. The China market is like the sun: the opening
of the China market few decades ago was just like the break of dawn, giving
us light to pave our way in the morning. Now as the China market is slowing
progressing and absorbing all the economical benefits, it will soon be one
of the largest economies in the world. Just like the noon sun giving light
to everywhere in the earth.
has attracted the largest number of foreign direct investment (FDI) every
year among development countries ever since 1993, and attracted the second
largest amount (USD 117.2 billion) of FDI after USA (USD 174.7 billion) in
the world in 2012. Till today, millions of foreign enterprises are
operating in China, many believe that down the road, China would be the
strongest market outside the big giants such as the USA and Europe.
However, too much of the
scorching sun does not do any good to our body. Even though we need the sun rays for
vitamins, without proper care, many can fall under the hands of the sun
rays such as skin cancer
and bad complexion. Similarly, the China market has its risks and dangers.
The China market may be progressing at an average 9% growth since 2003, many
investors actually failed and loss their assets in the China market.
One of the major reasons
for that foreign investors failed to enter the China market with a big
bang is that foreign
investors are unfamiliar with the business culture in China. The Chinese
integrates both personal and work matters when carrying out their business.
Thus foreign companies are always confused with the way the Chinese behave
The Chinese value
relationships very highly. They believe that having a close relationship
with another party would be the way to deal with business opportunities. The
Chinese use the Chinese words, “Guan Xi” to
indicate any type of relationships; be it on a personal or business or a government level.
The Chinese prefer to work
with someone familiar as it minimizes any disagreements or problems that
might occur. Furthermore, being familiar with someone would allow the
parties involved to have more trust with one another. Therefore, as foreign
investors are new to the China market, they might not have the network or
“Guan Xi” to gain the trust of the Chinese companies. This will most likely
create complications when the foreign companies are trying to establish
their enterprise in China.
However, not all is lost
for foreign companies. Partnering up with a local individual or organization
will allow them to gain an easier way to a network. The locals would be more
familiar with the way things work around in China and they would be in a
better position to negotiate matters with the other domestic companies.
The Chinese have a
different style of negotiating. Despite years of business management and
negotiation tactics, foreign investors may be at the losing end when dealing
with the locals. Firstly, the Chinese do not have a lot of actions and
facial expressions when they talk and thus foreign investors have to infer
their true response when negotiating with the locals. Furthermore, being in
a collectivist society, the behaviour and characteristics of the Chinese
would not be the same as those in other countries, especially countries
which are more individualistic.
The Chinese have a very
strong national pride and are more comfortable with familiarity. One of the
marketing strategies would be to target on their national pride. As China
expands its economy, the domestic market is also progressing. The Chinese
are producing higher quality products at a lower price. Thus, the domestic
industry are actually gaining more market share in China and thus creating
higher brand awareness. Foreign investors who want to enter into the China
market need to take note not only of their competitors of the same level but
smaller local enterprises who are gradually expanding.