Exporting to China – The Importance of Culture

shanghai  in a beautiful dusk

China seems to have been in the news a lot recently. After years of double digit economic growth, the Year of the Goat has started with the announcement that growth has dropped to “only” 7% . However, even this reduced rate is in stark contrast to the economic situation in the West where, in many countries, GDP is barely growing and unemployment remains high.

This week, the FT commented  that “A slowdown in China is widely seen as necessary and inevitable as the country tries to retool its growth model away from smokestack industries and towards domestic consumption and services.”  With that in mind, western companies are still looking to China as a huge potential export market. After all, even at its reduced growth rate, China will still double in size within the next decade.

Small companies with limited resources often struggle with exporting to local markets let something as complex as China. But, from personal experience, it may be a lot easier than you think.

Some time ago, as an employee of a large company, I enjoyed my business trips to China. Stepping out of Beijing Capital Airport, I would be met by a smartly dressed driver who whisked me to my hotel in a sleek air-conditioned car. The people that I met – either through work or at my 5* hotel spoke perfect English.  Little did I know how far this was from the real China.

A few years later, working for a much smaller company, I got better sense of China’s culture. Hailing a cab at the airport in the middle of winter was a very different experience. Luckily, I had remembered to take the name and address of the modest 3 star hotel written down in Chinese! Visiting some customers far away from Beijing later that week, I was dismayed to find that they could buy a Chinese equivalent of my product for much less than just the cost of the parts in the UK.

I had come to realise that China is very different and it seemed to me that regardless of how good my products were and how well suited to they were to the Chinese market, if I was to succeed in establishing a growing and profitable business there, understanding the culture would have to be at the heart of what we did. As Ram Charan wrote in his book “Global Tilt”  – “A common mistake is the common practice of sending envoys for 5 day visits and assuming you understand the market.”

“Getting” Chinese culture took 3 simple steps.

Firstly we set up an office in China. It is possible to open a representative office – one that does not trade directly – for a very modest amount of money and it can be done quickly. A local office allows you to employ staff in China to work directly with distributors and customers – who will love the support that they get. It also helps you to better understand the market, what products you need produce and (importantly) which partners you should be working with.

To set up the office, we worked with China Business Solutions who provided us with a complete “one stop shop” service. Their CEO, Ting Zhang, and her team did a fantastic job taking care of all the paperwork and working with recruiters to help hire our first employee. As a result, the office was up and running within only a few months.

Secondly, we hired a Chinese staff member in the UK. That not only enabled us to localise our products (manuals/menus etc) but also, by having a Chinese national in the office, it was harder for the rest of the company to forget what we were trying to achieve. It was also helpful for the remote employees in China to have someone at the main office that they could work with directly and in their mother tongue. If your budget does not stretch to this, consider hiring an intern or summer student for this work.

Thirdly I made it mandatory that the entire senior management team visited China at least once each year. It is too easy to leave the China visits to your sales team but when your quality manager hears first hand about some of the unique issues Chinese customer face or your R&D manager sees the importance of having Mandarin menus in the product, it really helps. If the whole management team is exposed to the culture at first hand, it is more likely that you will make the changes to your products and operations that Chinese customers expect.

There are lots of excellent resources available on line such as this document from “Asia Briefing”. A recent broadcast on BBC World Service also gave some good ideas. However, if you can provide your distributors with great local support and make some progress getting Chinese culture into your company and its products, success should follow.

Growing a profitable business in China is not easy and having great products is just the start. However, by taking these actions we grew our business rapidly and with greatly increased margins.

About Sam
Sam Luke is a director at Xyrho Ltd. He uses his 25 plus years sales, marketing and general management experience to help small and medium businesses improve their financial and customer performance.