As the largest growing economic market, the business potential China offers can’t be ignored. At the same time, entering China is not a simple proposition and you will face many new experiences you have never had in other markets.
Y Soft recently expanded into China with a subsidiary office in Shanghai – a process that took 4 years. There are many cautions and recommendations that can be made, but here I will list what I consider the top 3 tips to successfully expand business into China.
Tip #1 – Study the market
This sounds both easy and obvious, but it isn’t and it takes time. Business in China happens at a much slower pace, therefore patience is required. Expecting to rush or push things through will not be received well. Established processes, particularly regarding legal or government, will proceed at a pace that may seem glacial but they do move forward.
During this time, it is beneficial to understand the various players in the industry. You will want to understand the local players – keeping in mind that China is vast and has several regions where each region may do things differently. Partners, competitors and other industry members may only do things within a region or do them differently in each region. By studying the market, Y Soft learned about companies who are competitors but only on a regional basis within China. Few companies have the infrastructure to support sales across the entire country. Others, who could support the entire country, could not do so outside of China. As China’s economy grows, Chinese companies are expanding outside their borders.
Understanding the business ecosystem at the micro level like this helped Y Soft identify the areas where we could offer value in the market. It is possible to study the market from outside China. We began with existing relationships we have in Hong Kong and Taiwan.
Tip #2 – Establish relationships
Once you have identified companies in your industry that you may want to do business with – whether that is potential customers, partners or related companies that also are in the industry – spend time to build relationships with them. Understand their business, what they offer and where there is common ground.
In China, similar to other Asia Pacific countries, business is conducted through a trusted relationship. As in any relationship, trust is something that is earned and takes time to develop. By having relationships in Taiwan and Hong Kong, we were able to be introduced to Chinese companies in order to start the relationship building.
In the case of Y Soft, who reaches customers through certified partners, finding the right partner was a critical step. Once Aurora Office Automation was identified as a suitable partner where Y Soft’s and Aurora’s respective core competences and areas of expertise complemented each other, I worked with various levels of Aurora personnel to build a trusted relationship between our two companies; eventually the meetings and trust rose to our respective corporate management teams.
Tip #3 – Local staff is key
As mentioned in tip #2, China is a country that does business based on trusted relationships. It is quite normal that Chinese companies want to work with Chinese people. This means it is required to have a local office with local staff.
Keeping in mind that establishing an office can be a lengthy process, it is still critical to have a local office and staff that speak the local language. It is also important, as part of the trusted partner relationship, to have local staff that can support sales and service concerns. In our situation, partnering with Aurora gives Y Soft a path to sales and marketing activities. However, Aurora depends on Y Soft to provide the technology, consultative services for IT deployments, training for their staff and ongoing support for high level issue resolution. The entire relationship would not work without local staff who can speak with customers and Aurora staff in Chinese. A website that is localized in Chinese is also recommended.
There are many companies who offer assistance with expanding into China. I would view this as a last option. Chinese companies value the time and effort shown in doing the work yourself; building relationships cannot be outsourced.
On a final note, once in China, the relationship building doesn’t stop. Chinese companies value face to face meetings for ongoing business plans and reviewing the relationship.
I would love to hear how others have successfully navigated their company’s expansion into China.
Milan Fujita is the CEO of Y Soft Asia Pacific. He oversees strategic business development and partner relationships in the Asia Pacific region. He also holds responsibility for general management of all Y Soft subsidiaries in the region which includes China, Australia, Japan and Singapore. For more information, please visit ysoft.com.
