Western companies having problems in China is a popular topic in media. But some foreign businesses actually thrive there. Watch this short Stanford video with Gary Locke, former U.S. Ambassador to the People’s Republic of China, about how foreign businesses can succeed:
According to Ambassador Locke, “one way is to find a Chinese partner and build your business from the ground up including jointly pursuing R&D”. When the Chinese have a stake in your business they are more likely to support it. That’s how, for instance, IBM Research operate their research centers in China.
Protect intellectual property and trade secrets
Ambassador Locke cautions that having Chinese partners pose challenges as well. His advice is that “you must make sure that you and your Chinese partner will protect and enforce intellectual property and trade secrets”.
Collaborate with the Chinese government
He is of the opinion that foreign companies that work with the Chinese government on corporate social responsibility projects are also better perceived in China than companies only looking to sell their products.
Several companies for instance built substantial good will in China after the 2008 Sichuan earth quake that killed about 70,000 people and left 5 million homeless.
Another successful model, according to the ambassador, is to build an enterprise that relies on an eco system of talent and creativity. If your company isn’t centered on one single piece of technology that can be transferred elsewhere by an employee with ill intent your business can thrive in a Chinese partnership.
Long term committment essential
What the ambassador says complies with what most analysts agree on i.e. that foreign companies wanting to do business in China need to show a long-term approach and that they’re in the country to stay.
Would personally like to add that it’s essential for foreigners wanting to do business in China to adapt to the Chinese. Not the other way round. It’s a different culture and there are many differences. For example having to let them smoke even if you hate smoking is important, use business cards, smile, make friends before you do business, avoid being too casual and, maybe above all, always let them save face.
Do you agree with ambassador Locke’s advice to foreign businesses wanting to succeed in China? Is there anything you would like to add? Are you already thriving in China? If so, what’s your experience? Or maybe you tried and failed? In that case, what went wrong? Are you planning to do business in China? Maybe you live and work in China and your advice for succeeding in China is different? If so, we would love to hear your recipe for success.
Video: Stanfordbusiness – Picture: Ministerie van Buitenlandse Zaken