Risk vs reward: is China worth the effort?

Business Asia, Nov, 2003 by Randolp Ramsay

"Another issue you'll hear business people talking about here is unevenness of interpretation and application of rules and regulation. Rule X might apply in Beijing, but when you get to Guangzhou it may or may not apply."

Language skills

Day to day business operations can also be problematic in China. Particularly in the major cities, environmental problems such as traffic and pollution can be a concern, according to Beijing Consulting Group's Smith.

"Traffic can be lousy and the environment is still somewhat removed from pristine, but the quality of housing, of offices, of telecoms infrastructure, of recreational and entertainment facilities, etc is rapidly improving and approaching world standards in key cities such as Beijing, Shanghai, and Guangzhou," he said. "But the cost of such facilities is also comparatively high Also, China doesn't just operate 9-5--business is done at all hours and in some surprising locations."

Language skills are, for now, still a key requirement for doing business in China. Although English is rapidly becoming the language of business, AustCham Beijing's Ishmael says it is beneficial to know some of the local dialects.

"Chinese is not an easy language to learn--you need 4000 characters for basic conversation, then you need to remember there is a specific set of vocabulary just for a particular industry," he said.

"What I've found personally is if does help to know the language, but having the proficiency to do a high level meeting is maybe not always necessary.

"A lot of businessmen here still use interpreters for high level meetings. I can guarantee you though, that a lot of the top Chinese company guys are foreign educated and they can talk English. They may not talk to you, but they understand."

Guanxi matters

Despite places like Shanghai exuding a decidedly Western atmosphere to the outside world, Ishmael warns prospective exporters to China to be fully aware of the cultural differences still present.

"There are a lot of formal things you need to keep in mind. It's important to know the cultural aspects--say a few words, make small conversation, how to give the card over properly, accept the cigarette, bring your gift all those types of things," he said.

One aspect of Chinese culture that is still well and truly alive is that of guanxi. The concept of guanxi, or having connections, has long been a stable of Chinese business. Austrade's Hewett says while guanxi was still important, Australian businesses needed to be wary of prospective local business partners claiming to have it.

"A lot of people talk about guanxi--that relationships count. That's true, but relationships also count in places like Australia," he said.

"What we're keen to warn business visitors coming to China is there's a pattern they'll find where they'll be approached by a great number of people, all of whom will claim to have connections or linkages to the President's office, the chairman's office, this or that office.

"They might--usually if they're talking about it a lot they don't. The advice I give people is you have to keep this whole guanxi thing in proportion. At the end of the day, a good product professionally presented with a good business case that means a great deal. You have to keep the relation ships stuff in perspective."