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Doing business in China

The fast growth of China’s economy, and the progress made
since joining the WTO, has resulted in significant business
opportunities. These opportunities have attracted many international companies who are seeking to become part of the biggest market in the world.

Before identifying the business areas you intend to focus on, all market intelligence should be double-checked. There are many circumstances that could lead to misunderstanding, a loss of money, and a waste of valuable time.

To avoid this, you should be aware of the following:

Identify the appropriate people to consult. When you consult experts, you expect to get accurate advice or suggestions about your plans. But this is not enough. You must make sure that the consultant is in the right position, and is independent, so that advice is not influenced by prejudice or ulterior motives. This may be one of the reasons why companies from America or Europe sometimes fail in China, while local companies grow and are successful within a few years.

Second-hand or even third-hand information can lead you to incorrect decisions. Everybody knows that China is changing very fast, but you can’t imagine how fast the change really is. At the beginning of 2000, for example, there were only about 200,000 residential meters in Beijing under the direct measurement of the Beijing Power Supply Bureau, but this number has increased to 2 million meters since then. The reliability and accuracy of the information should be checked, especially when the information is received from persons or organizations outside of the market.

Outstanding receivables can be a real problem when you do business in China. Some local meter suppliers carry outstanding debts that amount to one third or even half of their total sales revenue. The payment delay can be up to two years, or more. To avoid this problem, commercial terms arranged with Chinese business partners should be carefully negotiated.

In order to take advantage of the outstanding business opportunities in China, companies should be aware of the pitfalls. Many companies have made a success of their operations in China, as they are aware of the risks and have reputable business partners. Wishing you all successful business opportunities in China!