A little while ago I wrote an article on “10 things you must do to win in emerging markets.” China is still considered an emerging market for technology products, given that the majority of the people still live and work in areas outside the reach of technology (mobile phones being, or at least becoming, the exception). Therefore, I believe these 10 principles hold true in China as well.
But even though China is seen as THE market to target, given its population and spectacular growth, many companies that are successful in emerging markets find themselves either failing in China or “afraid” to approach it. I recently talked to some people at a wildly successful, multibillion-dollar US-based software company who are avoiding China initially and focusing first on India as they begin their expansion into emerging markets. They thought it would be easier to “crack” India first then bust their chops in China.
This trepidation is well founded. While China arguably has the most “untapped” market potential, the nuances and vagaries of doing business in China, due to its history, culture, and existing government structure, make the approach to being successful in China a unique and more challenging one.
I spent almost three years growing and fixing various business ventures in China. In no way does that make me an expert on the subject, but I do have some insights to share. Based on my personal experiences working in China and learning from my network of business associates, here are my 10 guiding principles for building a successful business in China.
- Develop a comprehensive government relations program, for both the Chinese & US governments.
- Become an expert on how the Chinese business person thinks and works. (Read “One Billion Customers” by James MacGregor.)
- Trust no one. Remember what Andy Grove said, only the paranoid survive, and that is especially true for China.
- Think/invest for the long-term … nothing happens fast in China, even if everything moves fast.
- Develop a combat strategy for corruption.
- Hire wisely … your management team will make or break your business.
- Develop a rock-solid product/technology strategy that includes a multi-faceted IP protection plan.
- Do not go it alone, but partner carefully and wisely. (See #3).
- Position everything you do in China around “how you are helping China.”
- Relationships (guanxi) is how business is done, but never assume relationships are static. See #3.
I will elaborate on each of these principles over the next few weeks, as one sentence cannot give enough context to do each of these justice.
And as always, if I have I have missed something, please add or comment.