China market entry is not something you want to do alone. Even if you’ve entered other foreign markets, the China market is very different. Many other businesses have made the mistake of being overconfident and falling flat on their face as a result.
The Cost of Failure is High
If you want to enter the China market, one of the safest ways to do so is through forming a WFOE. But to do this in China, you need a minimum of 2 million dollars, and that’s in capital, not assets. And, of course, that’s not taking into account all the other costs of actually starting the business there! With that kind of money on the line, you want to make sure you’re going in the right way with good advice and a surefire plan for success.
That’s why hiring an excellent China consultant is worth the time and money. They’ll have access to market insights, business contacts, and entry strategies that could take you years to develop on your own.
It’s a Different Business Culture
Believe me when I tell you that doing business in China is almost nothing like doing business in the US. It’s not just a different language, but a completely different culture. Successful China market entry will depend on adeptly navigating those cultural differences. These differences can range from what kind of gifts to give (never give a black and white gift) to negotiation tactics. You’ll want insights into both the small and large differences and that’s where your consultant can truly help you succeed.
Legal Contracts are Radically Different
Another huge mistake, and I can’t emphasize this enough, is that many companies think they can just draft a contract in English, have it translated into Chinese, and then start doing business. This is absolutely the wrong thing to do. The Chinese legal system is completely different from the US’s. A contract drawn up according to US rules and regulations will have almost no bearing in the Chinese court of law.
While you might have a bilingual staff member or have hired a translator, they, in no way, are going to be able to tell you if the terms of the two contracts match and will hold up in courts on both sides of the ocean. A China consultant can help you with this or connect you with someone who you can be confident will do it right.
They Have Guanxi
If you’re thinking about entering the China market, you’ve probably already heard a lot about guanxi. It’s the grease that oils the wheels of all business in China. As a foreign business, you aren’t going to have any, and it can takes years to build. I can also tell you from experience that it’s not something you can just build once and be done with. Every time you expand into a new city, you’ll have to start over again. Your China consultant is already going to have extensive contacts is many places in China. They can help you not just enter the China market in the beginning, but continually as you expand into new markets in the country.
Don’t make the mistake of trying to enter the China market on your own. Spending money for a good consultant now will save you untold headaches and avert significant financial losses, so be sure to take advantage.