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Doing Business in China
a guide to the right cultural and business approach Elcamedia Csr Consultancy

A European’s guide on How to do Business in China An Executive Summary.
by Dr. Robin Porter Senior Consultant for China Projects, ElcaMedia CSR Consultancy Fmr. Counsellor for Science and Innovation at the British Embassy in Beijing

Copyright © 2012 ElcaMedia CSR Consultancy - Leading international agency for embedding CSR & Sustainability into an overall corporate strategy. Printed in the UK.

Business with China

According to the 2012 ‘ease of doing business’ index created by the World Bank, China ranks 91 out of 183 economies listed. This indicates that China is not an easy place to do business; however it is still the highest ranked economy of the BRIC countries. If your goal is success in China, the right cultural and business approach is vital. In the following pages, we lay out some important dos and don’ts. It is important today for Europe to establish strong ties with China over a broad range of activities. This stems from a number of considerations. • China represents one quarter of the world’s population. • Over the past thirty years China has for the first time ever engaged fully with the international economy, and has registered extraordinary rates of growth on average over 8% per annum of GDP since 1984. • In the twenty-first century, China will occupy a pre-eminent position in international affairs. • Major environmental and health issues affecting the prospects for sustainable development globally will not be resolved without China’s active participation. The bottom line is that we need China just as much as it needs us – if this was not clear before the recent financial crisis, it surely must be now.
*Singapore topped the ranking for the sixth year in a row

© 2012 ElcaMedia CSR Consultancy - Leading international agency for embedding CSR & Sustainability into an overall corporate strategy

What are the main challenges involved in doing business with China and how should they be approached?

© 2012 ElcaMedia CSR Consultancy - Leading international agency for embedding CSR & Sustainability into an overall corporate strategy

1. Sell what China wants; buy what China can supply.
It may seem like stating the obvious, but your starting point must be the ability to offer China the goods, technology or services that the country actually wants or needs, or to seek from China products which it is able to supply. In recent years, goods successfully imported into China have included sophisticated machinery and technical equipment, transport equipment, mineral resources, agricultural products and, increasingly, luxury goods of all kinds. Technology is consistently in demand in China, particularly related to automotive, power generation, aircraft parts, oil and gas processing, the manufacture of electronic equipment and environmental technology. Services which have successfully been supplied to China have included trade-related services such as handling and international transport, financial services and the provision of consultancy on health, safety and the environment. However, these examples are by no means exclusive. And if you plan to source goods from China, nowadays all but the most highly technical items can usually be supplied.

2. Have the right attitude.
A recent study* shows that around 50% of global business leaders see China as ‘…the greatest opportunity facing their business’. Developing business with China may not always be easy, but the possibilities are too important not to explore. A positive attitude, patience, a polite and respectful manner, unwavering professionalism and consistent attention to detail are all qualities which Chinese businesses will expect to see reflected throughout your organisation.
*Oxford Economic Forecasting

© 2012 ElcaMedia CSR Consultancy - Leading international agency for embedding CSR & Sustainability into an overall corporate strategy

3. Take a long-term view.
China is a market where you definitely need to take a medium to longterm view. If you must look to the short-term, China may not be for you. Successful business in China can only be built up over time and requires the careful cultivation of personal relationships, the development of trust and constant attention to the needs of the project in hand. Firms which take a ten to twenty year view of the China market are usually the most successful.

4. Know your market.
There is extensive contextual information in sources like the Economist Intelligence Unit’s Country Reports, the Far Eastern Economic Review, the Asian Wall Street Journal and the South China Morning Post, all of which are published in Hong Kong. These sources are in English as this does tend to be the language of business with China. Information about specific trading opportunities can be obtained through the trade ministries of most European countries and from lists of projects funded by the European Union, the World Bank, the Asian Development Bank, the UN Development Programme and other international agencies. In addition, delegations from all parts of China frequently visit the major European capitals, carrying with them requirements for goods and services. Chambers of commerce and trade associations often list commercial opportunities in China, while participation in trade missions, exhibitions and technical seminars in the country can also help you to build up a better picture of the market for your goods and services.

How to approach the main challenges
© 2012 ElcaMedia CSR Consultancy - Leading international agency for embedding CSR & Sustainability into an overall corporate strategy

5. Attend to due diligence.
There is a real need to be thorough in observing due diligence in China. This may best be addressed by obtaining specialist professional advice. As some have found to their cost, failure to do so can result in working with unsuitable local business partners which, as some European businesses have found to their cost, can result in disastrous consequences. When any agreement is being discussed or drawn up, always apply the same due diligence to all matters involving intellectual property. While legislation and its enforcement on IPR have improved in China in recent years, some areas of concern still remain.

6. Present offers which are fair and true.
Discussions with your Chinese counterparts must give an accurate representation of the characteristics of the product, technology or service which you are offering. Sometimes we are victims of our own propaganda and may overstate our case, perhaps believing that the Chinese will not know much about the product, technology or service in question. If this was ever true, it certainly is not now. Presentations made in an unboastful and matter-of-fact way will be far more convincing and will avoid giving offence.

7. Tailor your offer.
China’s circumstances and the challenges it faces in its efforts to modernise are in many ways unique. Products, technical solutions or services which are suitable in other contexts are not always appropriate for China. And ‘off-the-shelf’ solutions, however good elsewhere, may not win the contract.

How to approach the main challenges
© 2012 ElcaMedia CSR Consultancy - Leading international agency for embedding CSR & Sustainability into an overall corporate strategy

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About ElcaMedia CSR Consultancy ElcaMedia CSR Consultancy is a leading international agency for embedding Corporate Social Responsibility (CSR) and Sustainability into an overall corporate strategy. We are the first company in the world with Cradle-to-Cradle certified consultants: a prestigious closed loop/ circular economy model. Corporate Social Responsibility provides significant opportunities to build long-term business value. ElcaMedia CSR Consultancy has proven experience of achieving ROI from CSR: developing clear steps for action helping international companies identify, adopt and implement CSR strategies throughout their organisations for the greater benefit of all stakeholders. These include the necessity for a sound operational CSR strategy, a specific environmental and social strategy for the identification and management of related issues, employee training programs, and best practice in the field of approach, reports and communication when it comes to presenting the business to the wider world - including China. About the author This publication was written by Dr. Robin Porter, ElcaMedia’s senior consultant for China projects. Robin is an academic China specialist and is currently Visiting Professor at the Centre for East Asian Studies, University of Bristol (UK). He has been adviser on China to a major industry and from 2002 to 2005 was Counsellor for Science and Innovation at the British Embassy in Beijing. Disclaimer All reasonable efforts have been made to ensure that the material presented here is accurate and reliable at the date of publication. However, the company and the author reserve the right not to be responsible for the topicality, correctness, completeness or quality of the information provided. Liability claims regarding damage caused by the use of any information provided, including any kind of information which is incomplete or incorrect, will therefore be rejected. Copyright © ElcaMedia CSR Consultancy www.elcamedia.com

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