My first trip to Beijing involved a happy day walking some of the tourist sites. I was after some food but was intimidated by the array of unknown dishes on the restaurant windows. Relieved, I found a street seller who offered a few things I could point at. I ordered – I thought – a portion of fish, and some duck pancakes. Two minutes later I found myself walking away with two large carrier bags, one filled with 50 small yellow fried minnows, and the other a large duck carcass. Of course, embarrassed and linguistically disempowered, I did nothing but smile, suck up my (small) cash loss, and walk on with my head held high round the rest of the Forbidden Palace, clutching my smelly culinary goods. At least I’d have a story to tell back in the office!
During this trip, I’ve found myself thinking that this small experience exemplifies many of the real and serious problems that trip up UK businesses when they try to enter China.
We come, usually, with no language or understanding of the landscape. We begin metaphorically anxious and sometimes lost. There’s a sense of relief when anyone offers us help – and we eagerly accept, taking the offer at face value. We assume that our guide – often the consultancy we have employed – needs to simply position our product into the right market place, tie down the contracts; then we provide the supply chain and business will flow.
It comes as a surprise when it’s not that simple.
Firstly, there is the Chinese language of ‘cooperation’. Almost all Chinese will want to ‘cooperate’ with you. It’s easy to feel flattered and encouraged by this. After all, Westerners generally project a low-trust posture to any new business introduction, so to find doors and conversations swinging open so readily is a nice change! Most of these cooperations will come to nothing. Discerning which should be pursued requires skill, experience, understanding and time – which all cost money. You could argue that the critical task is finding the trusted partner, with the local experience, know-how and network to do this.
Secondly, there are plenty of organisations which sell such consultancy services. However, it’s important to understand that ‘China Entry Consultancy’ it is an industry in its own right. There are plenty of offers of CEC help here too. It’s difficult to discern whether we need most help with IP protection, branding, commercial registration, server location, local politics, government grants, regional guidance and so on, and what we should pay for each. There are CEC specialists in each part of the chain, and the costs can mount up very quickly. We can have emptied our budget before we even arrive. Again, unlike your domestic market, you simply don’t know what’s available, or acceptable, to pay. Remember, CEC is an industry in its own right: most of them get their money regardless of whether your company sells any product.
Thirdly, there is the Chinese culture of status. The West is a meritocratic democracy. We are used to flat structures which mean that, if we have a good product, pedigree and track record, then often functional authority rather than seniority drives procurement. Rank is not a great barrier. It’s a mistake to think China is the same. Rank matters. Chinese organisations are often very political with both a small and capital P. When you are talking to a company, their affiliation to the state or regional government, or the lack of it, needs to be evaluated as potentially a door opener or closer. When you are talking to a representative, her seniority in the company matters. You need to talk at the right level, to the right organisations, who have the right relations within the societal system.
Sun Tzu (a Chinese strategist from 2500 years ago) said that it is difficult to fight a long way from home. China is a long way from home geographically and culturally; we need to be open and committed to a long journey. Confucius (apparently) said ‘when I walk along with two others, from at least one I will be able to learn’. We need to be committed to learning.
I would add ‘start from the point of your own ignorance and find the wise person to walk with you’.
That involves finding someone who will take you to the destination you are trying to reach, not just start out on the road with you. It probably involves finding someone who has walked that road themselves. Test their track record. Do your due diligence and evaluate their resources on the ground. Start with a small project to test their capability but engage them with conversation on strategic and long term objectives of your business. If you like what you hear, it is a good sign that they are the right people to help you reach your destination.
Finally, in my own experience, tying down costs for each element is important. Considering a full-service package in which the provider is invested in all elements of the chain is another option. This can save you a lot of time in briefing and managing multiple agencies. After some research and comparison, I decided to entrust STEER’s China activities to Crayfish. In just three months, we have made so much progress, including an unexpectedly fulfilling trip to China. We now have a clear, effective China strategy and I’m already planning my next trip to China!
It may be a good dinner party story to tell: to come back from two years’ endeavour in China with the equivalent of a large carrier bag of fried yellow fish, a duck carcass and not much else. It’s probably not such a good story to tell to your board or the investors.