Despite the limitless opportunities that China are offering, expanding your business to a foreign country can be intimidating and overwhelming, especially for SMEs. There are many factors to consider, from regulatory compliance to routes to market, to name a few.
At Salesupply, we're helping clients expand their business to China via our Check Out 2 China programme. To find out what specific challenge and opportunities small companies face when marching to China’ rapidly developing market, we interviewed:
Stuart Morris, Managing Director of KLT Filtration Ltd
Glenn Chapman, Managing Director of RATstands
Q: What’s the biggest difference between doing business in the UK and China?
Stuart: I have been selling in China for more than 10 years. One of the most important things I would say is ‘be aware of culture difference’. In the UK, business is task or result focused, but in China it is very much about building a strong relationship/network, and business comes later. In China, people do not often admit ‘failure’ as saving face is very important in its culture, therefore, you need to know when it’s a ‘NO’ even when they don’t say it.
Glenn: Culture is the THE big difference, which reflects the very different market approach. You learn it by doing your own research and meeting people. It is fundamental to understand how the China’s market work and keep up with the pace of an ever-evolving market. In the UK, it’s easier to set up a business account, but in China it can be a different story. It’s also getting increasingly difficult to move money from China.
Q: What are the top tips/advice that you can give to fellow companies who are thinking of expanding into China?
Stuart: Do not rush into it. You need to understand what you are trying to achieve in China and have a clear strategy for market entry. You also need to identify the experience and new skills you need. The language alone is a big barrier, which slows things down. In our case, we knew we did not speak the language and we knew we didn’t have the expertise in the electronic market. We do not want to employ people at the initial stage, so we decided to subcontract, which has proven to be the most cost-effective way for us. A good agency has all the resource and knowledge, and they can also beat the time difference to speed things up.
Glenn: I have been selling for around 10 years in Hong Kong prior to entering the mainland China market. One piece of advice I would give is you need to do your own research on the ground. Understanding the local market is absolutely vital. Language difficulty can prevent things happening. Therefore, you need to find a good service partner to work with who is trust worthy. Again, you need to look around and do your research and compare.
Q: How much money should one have when thinking to invest in China? E.g. initial investment
Stuart: We are a small company and do not invest huge amount of money. We understand what we are trying to achieve in China, budget carefully and spend it wisely. As I mentioned already, working with an effective service provider can reduce your initial investment significantly.
Glenn: You should be very cautious otherwise you can quickly start over-spending. You need to include budgets for travelling as it’s a long way to go and you need to travel there frequently if you want to be seen in all relevant events/gatherings. The costs for flights, hotels and other expenses soon add up.
Q: What are the lessons you have learned from doing business in China?
Stuart: Manage your expectation of growth in China, as in most cases it is not as high as you expect initially.
Glenn: Definitely not to take the first option which often seems to be the easiest. You need to get involved in all the decision-making process, and physically be there and be part of the team. Talk to multiple people and stay alert. It is good to get some UK help like the service provided by Salesupply who has the local expertise and meanwhile can provide impartial advice. It is essential to have a good service provider you can work with.
In summary, for SMEs who are looking to cash in on the booming Chinese economy, there are risks and challenges to face. However, if you can develop an in-depth understanding of China’s ever-growing market, adopting appropriate strategies, working with right service partners, the success is not far away.