Business with China Without Going to China

Out of 4 different ways to do business with China, executives often neglect the most dynamically developing, and possibly easiest one.

When companies ask me prepare leaders for business with China through coaching, training, advisory or keynotes, I introduce 4 ways to do so. Successful partnerships usually blend them, but it's still worth "unpacking" them.

SELLING GOODS OR SERVICES INTO CHINA

This is where most companies start: At a keynote for Bosch Hungary last week, I took the story of Volkswagen from exporter to China market leader in a decade leading up to the 2000s.

- Advantage: Low commitment and localisation.

- Top risk: China soon outgrows the volume capacity of an export model.

MAKING IN CHINA AND SELLING TO THE WORLD

Once a foreign firm starts local production, China soon becomes a hub for global exports. Speed, volume & supply chains justify piling eggs into the China basket, and multinationals historically pulled great profits with this model: I often quote BASF as a classic example.

- Advantage: Upgrades to business volume & speed in no time.

- Top risk: Increasing strategic reliance on China.

IN CHINA, FOR CHINA

Recent pressure by Beijing on foreign firms to operate as local PRC entities, combined with geopolitical resistance to Chinese imports & influence, convinced some PRC branches of multinationals to rely almost entirely on the PRC market. According the the European Union Chamber of Commerce in China, 30-40% of multinationals operate in the PRC without a single foreign employee, including management.

- Advantage: China speed combined with access to an otherwise protected market.

- Top risk: Changes in China can undermine the entire global operation.

BUSINESS WITH CHINA OUTSIDE OF CHINA

As PRC firms seek profits abroad to escape domestic price wars, the most dynamically developing opportunity to do business with China is working with new Chinese multinationals worldwide.

- Advantage: No need to bother with Chinese language, laws & politics.

- Top risk: Underestimating the necessary intercultural competence.

For international executives, managers and experts, collaboration with Chinese firms is significantly easier outside of China. But call after call with executives involved in such partnerships repeats the same observation: Chinese businesspeople expect global partners to understand and if necessary, adapt the Chinese way of doing business in the given geographic and strategic environment.

Chinese firms are just going global, with little overseas experience: they rely on their global partners to match China's value proposition with local demand. That role does not require the same skills as working in China, but a clearly defined and sharply targeted intercultural skill-set is still a non-negotiable condition of success.

Message me to bring my Dragon Suit workshops, coaching or keynote to your leadership team.