With China being Australia’s largest trading partner, there is a high probability that your business is somehow linked to the performance of the Chinese economy. There are great opportunities that come with working with Chinese businesses, however as many industries have seen, it’s not always a straightforward partnership.
China is one of the world’s largest economies, ranked 2nd to the US but that may evolve in the coming decade. China’s GDP is about 14.3 trillion dollars according to the Observatory of Economic Complexity (OEC). Looking at demographics, China boasts a population of a little under 1.5 billion people, which means that with some careful target audience profiling you could have the ability to reach astronomical amounts of prospective customers. Regardless of your go-to-market model, using eCommerce platforms such as Alibaba or Taobao, or a local distributor to manage your sales network, establishing strong local partnerships can offer a launchpad for your business to expand beyond Australia.
China is Australia’s number one export location, exporting 111 billion dollars worth of goods to China in 2019. This volume is increasing 17.7% every year, making it an extremely lucrative place to do business. However, before selecting a partner it may be worth addressing the different ways both cultures conduct business. We’ve created this checklist to help ensure your success in the Chinese market;
- A great introduction is imperative when working with a Chinese company for the first time. It’s recommended to have a representative with strong contacts in China, this will make your potential partners feel more comfortable, help you address cultural nuances and follow up on potential partners.
- Business cards are also a necessity, this goes beyond giving a good first impression. It may be worth getting them printed in both English and Mandarin. When you accept someone’s business card, spend some time studying it and ask them a question about one of the details to demonstrate your interest.
- Building trust is also something done in the initial stages of meeting, and is essential for creating an effective working relationship before getting into details of a presentation or discussing contract terms.
- It may be worth seeking legal advice from a team within China prior to visiting the market, handing out business cards or sharing your presentations. The primary reasons are to review your IP and consider registering your business trading name prior to sharing these materials.
A few other things to be aware of when it comes to preparing for a business trip or seeking out business partners in China;
- Resist the temptation to jump straight into the market just based on the size of the Chinese population. It may be worth attending trade shows, reviewing a number of local partners, evaluating their experience in your industry rather than partnering with the first representative you meet with a good fluency of English. As we’ve seen in recent news, government regulation can be fluid, making it ever more important to find a local partner who can help you navigate the evolving economic and regulatory landscapes.
- When it comes to decision making and business terms, it’s best not to openly disagree or negate with your business partners. These conversations are best to be had in confidence in a more private setting, allowing your partner to maintain face and work through solutions with you.
- It may be worth interviewing and appointing a local staff representative, having someone acting on your behalf on the ground, meeting with partners and taking responsibility for driving progress. Business trips and time in the market are valuable but think about who can keep progressing and reporting on partnerships when you are not there.
In summary, doing business in China or with Chinese businesses offers great opportunities to grow and expand your business, tapping into new target audiences, diversifying your revenue sources, and opening access to one of the largest economies in the world. With some tactful planning and partnerships, your business will have a solid foundation for success.