All you need to know about business in China
businesses active in China. Doing Business in China: a Practical Guide is written to provide a comprehensive overview on factors and issues when doing business in China. Fo r more on our experience or on the services that we have on offer, or to read . China’s business climate. There is a notable increase in the rating of China being difficult for doing business (72 percent). This could be the result of having a larger set of survey respondents operating out of Australia. There remains a bias that doing business in China is challenging. However, education and.
Competition is pretty much the same everywhere. You just need to ignore the hype and focus on the basic fact that in China today, there are six big trends exhibit. Buisness are like tectonic plates moving underneath the surface. If you can understand them, the chaotic flurry of activity on the surface becomes a lot more understandable—and even predictable. These trends move businesses on a daily basis.
In fact, we how to blacklist iphone 5 to think that Chinese politics or political economics are wildly overemphasized by some Westerners in China.
For every one of them, we chnia argue a bull and a bear case. Most lead to profits or at least revenue. Some may be stable.
Some lead to bubbles that may or may not collapse. Urbanization is arguably the most important phenomenon shaping modern China. More than million people have moved from the country to cities in the past 30 years, and an additional million are on the way. China has cities with populations of more than one million how to tell if a praying mantis is pregnant 14 with more than five million.
Increasingly, these cities are becoming linked, creating urban areas with 30 million people or more—the size of many European countries. Before long, there will be one billion city dwellers in China, placing intense demands on infrastructure pd as transportation and public services, as well as on critical resources like clean drinking water.
Already, a staggering 40 percent of Chinese rivers are seriously polluted and unfit for use. At the same time, urbanization is creating a great deal of wealth. Some million people have moved out of poverty since in China, with disposable income per capita rising busines during that period.
Manufacturing makes up 40 percent of the Chinese economy and directly employs million people. But its traditionally low labor costs are rising, and there is aggressive movement from low-tech assembly to high-tech manufacturing, un well as from the more expensive coastal areas into cheaper central and western China.
Perhaps how to make a cardboard transformer costume most global Chinese company today is telecommunications giant Huawei Technologies, which grew rapidly xhina developing lower-priced equipment for second- and third-tier cities and avoiding competition from global manufacturers in major nusiness.
When Huawei expanded abroad, it targeted less-developed areas in Southeast Asia, Africa, and Eastern Europe that had been neglected by major global players. And at home, its scale has allowed it ho make more sophisticated products and move into first-tier cities.
Urban Chinese are shopping to meet emotional needs, driving a skyrocketing demand for middle-class goods, food, and entertainment. As an example, China consumed more than 13 million tons of chicken in —more than the United States.
For additional evidence, look no further than the how to clean polyurethane coated wood floors that the largest Chinese acquisition of a US company had nothing to do with technology, cars, or energy.
Almost every aspect needs to be improved, from land and water use to logistics and retail. Legend Holdings, the parent company of Lenovo, now lists modern agriculture as one of its five core areas, chuna a portfolio that includes kiwi and blueberry farming.
China is the single largest foreign purchaser of US government debt. The financial-services sector is a great churning mass of high finance, state capitalism, and one-party rule. The Big Four banks can and do function as an arm of the government, pumping lending into big state-owned enterprises and local governments uow than the small and midsize enterprises that employ 80 percent of the Chinese workforce. And this mismatch is driving a surge in the shadow banking system.
Inbank lending accounted for 88 percent of Chinese finance; init was 55 percent. However, most of these wealth-management products do not specify where funds are used. This situation creates risks and affects the dynamics of the Chinese banking sector. Banking is dominated by government regulation while shadow banking is not, which is giving it a competitive edge.
And this comes as lending in China has skyrocketed. The number of college graduates has surged from 1 million in to 7. There is an explosion in research-and-development investment: inChina accounted for just 2. InChina surpassed Japan and is now second only to the United States. The not-so-good news is that there is a substantial disconnect between education, employment, and other markers of Chinese brainpower. And even companies focused on cost innovation are not immune to market forces or competition: solar-panel maker Suntech rose rapidly—and fell from the world stage just as businrss.
The Internet is a recent phenomenon in China. About 60 percent of the million Chhina now online have only begun using the Internet in the past three to four years, and overall penetration remains at just 40 percent of the population, compared with approximately 80 percent in hlw United States.
The potential for further growth is underlined by another fact: Internet users in China spend five to six more hours online per week than Americans do. Yet ddo behavior is also different. While search and e-mail dominate online activities elsewhere, in Businses, users have gravitated to instant messaging and online co. That online behavior shows pddf sign of changing, even though gaming and businesw networking have become popular.
Consider, then, the growth of Tencent. Founded init now has more than million accounts for its instant-message service QQ. The pvf is now spending heavily to expand overseas, particularly in gaming. It bought a what city and state is area code 713 stake in Los Angeles—based Riot Games in and a minority stake in Epic Games the next year; it also has partnerships with both Activision Blizzard and Electronic Arts.
China is developing so rapidly and on such a vast divider scale bussiness instability and chaos are natural by-products. It is experiencing regular booms and busts across its economy in the same way a rocket ship experiences turbulence.
Yet underlying this volatility are powerful economic and demographic megatrends that are broad and long term. For more details about the book, visit onehourchina. Never miss an insight. We'll email you when new articles are published on this topic. Accept Use minimal essential cookies. All you need to know about business in China. By Jeffrey Towson and Jonathan Woetzel.
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Download the 'Doing Business in China Guide' as an e-Flipbook or a PDF
Since China joined the World Trade Organization in , WFOEs can do almost any type of business in China. The Foreign Investment Industrial Guidance Catalogue, the most recent version released in , divides industries into three categories: encouraged, restricted and prohibited for foreign investment (industries not listed. Punctuality is vital when doing business in China. The Chinese are renowned for being tough negotiators. One must be willing to show compromise and ensure their negotiators feel they have gained major concessions. Above all, patient and there will be no way to show anger or frustration with Chinese counter parts (“Doing Business in China. China will continue to deliver tremendous opportunities for global investors. China, however, is a market like no other. Its size and regional diversity call for a sensitive and sophisticated market approach, and its re-emergence as one of the world’s foremost economies has set off an unprecedented pull for companies to invest and do business.
May 25, Developing some insights into Chinese culture and business etiquette can help you when doing business in China. Check out two concepts that drive business protocol in China.
Observing cultural etiquette when doing business in China may be as important as having the knowledge of the market you're pursuing. That's because doing business in China is often relationship based.
A strong relationship with your Chinese business counterparts can help smooth business interactions. Practicing a few important business etiquette rules can be an integral part of cementing these good relationships. Chinese culture today is a hybrid of long-standing customs and Westernized lifestyle. Two major concepts of Chinese business culture revolve around the notions of guanxi , meaning "relationship" pronounced as gwan shee and mianzi , meaning "face" pronounced as Me ENN dzuh.
A few etiquette rules based on these overarching concepts can help you succeed in navigating the softer side of doing business in China. Guanxi is a Chinese term meaning "networks" or "connections.
It contains implicit mutual obligations, assurances, and understanding and governs Chinese attitude toward long-term social and business relationships. Broadly, guanxi is a linkage of social networks and influential relationships that facilitate business dealings. Consider making efforts to maintain the connection with your Chinese counterparts. If you say "Let's stay in touch," it's important to mean it and follow up on it to keep your guanxi alive. A focus on obtaining the right guanxi may help in getting business done.
Of course, guanxi alone is not a determinant for success. All other important requirements of the business—whether it's technology or management practices—need to be in place, too. But good guanxi can help smooth the way and may make it more enjoyable for all parties doing business, whether it's with partners, suppliers or customers.
There are several ways to strengthen your guanxi. Here are three principal considerations:. But in China gifts are a way of establishing a relationship and are far more common," says May-Lee Chai. Chai received her M.
Chinese business people give gifts of banquets for colleagues, employees and especially potential business partners; they may also give personal gifts like watches and purses to business partners for their spouses or family members, things that show respect and a willingness to do business with someone else. Small mementos—pens with company logos, other mementos with their company logos—are fine. Check out Chinese laws governing gift giving, whether it's to a business or a government official, to ensure that you respect the local laws and don't unwittingly make a mistake.
Thoughtful gift giving can be a way to enhance guanxi. Gifts are generally given at the end of an introductory meeting or dinner, at contract signings or at the completion of important milestones in projects.
Red and pink signify luck, prosperity and success. Taking this as an inspiration, you might consider wrapping your gifts in red. This could be seen as a thoughtful touch. When giving or receiving a gift, do it with both hands. It's usually a sign of respect and appreciation to do so. Paying for friends' and business associates' meals in group settings is an essential way of showing and maintaining close ties.
As banquets are generally a part of doing business in China, you're most likely to be treated to a banquet. If you're invited to a banquet, note that seating arrangements at these affairs may be determined by the social status of participants. The seat of honor may be designated for the host or a VIP chosen by the host. Guests with senior positions may be seated to the right and left sides of the host. Remaining guests may be seated in accordance with their position in the hierarchy.
You can use this as a guideline if you host a banquet for your Chinese clients. When doing business in China, it's important to be mindful of developing the relationship for the long-term. This can easily be done with sending the occasional email or telephone call, remembering to send birthday wishes and honoring special Chinese holidays such as the Chinese New Year.
Sincerity is a key aspect of true guanxi. Business relationships in China are almost always personal and often become social relationships. As Diego Gilardoni, author of the book Decoding China puts it, "the Chinese do business with you, not with your company. A key aspect of Chinese culture is the pervasive concept of "face," which loosely refers to someone's social standing, reputation and honor.
This concept generates codes of behavior that are central in Chinese society. They have to do with losing face and giving face. Losing face is about dents that can happen in a person's status. Basically it's about not looking bad. When doing business in China, it's important to be mindful of behaviors that can unwittingly have a negative impact on someone else's concept of face.
While in the U. It can be seen as a sign of disrespect, or worse as an attempt to harm someone else's reputation. Better to find a way to provide constructive criticism through a third party or wait till you can talk privately with someone. A related concept is the importance of giving face. This is about giving the other person a feeling of respect and making them feel important and valued.
A lot of the prescribed etiquette of showing some deference for older or more senior people in Chinese society and business circles can be a part of what's interpreted as giving people face. Think about ways that you can give face to your Chinese counterparts, for example, how you can genuinely boost their reputation or prestige in front of their superiors or peers. Consider any ways that you can show your confidence in them. Create a win-win situation by given them credit or praise for their contribution, and discuss any criticisms or failures in private.
This kind of respect is useful everywhere in the world, and essential in China. Giving face is an opportunity to build trust and goodwill and to further enhance your guanxi. Ultimately, navigating protocol when doing business in China comes down to understanding that human feelings often come first. Respect for people's feelings, as manifested in issues related to face or guanxi , should be one of the primary considerations.
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