China’s cultural challenges

Published —
16.07.17
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WITH its high growth rate and rapidly expanding consumer goods market, China remains an attractive location for British exporters. But there are plenty of pitfalls.

On its advice pages, the British government warns prospective exporters they will face both strong competition from China’s state-owned enterprises, and anti-monopoly laws targeting foreign firms.

It says the services of a local English-speaking lawyer are essential and urges patience in building trust and networks of agents and distributors when selling goods, setting up a Chinese company (to enable you to employ Chinese staff) or a local franchise.

Avi Nagel, who advises SMEs on entering the Chinese market for the China-British Business Council, says that alongside the usual challenges of culture and language, there are legal, technical and taxation peculiarities.

Recruitment, too, can prove difficult. “Finding competent people who understand the international way of doing things and what the British brand stands for is really important,” says Nagel.

People walking in the rain at Shanghai's waterfront
READ: Shanghai's opportunities and pitfalls

“Being able to keep staff in such a fluid market, where wage growth can be expected to be in double figures every year, is real problem for international firms.”

Those new to China can become frustrated with the tendency of local firms to give a vague answer and keep people waiting on a decision, rather than offering a firm ‘no’,” Nagel says. Meanwhile, the hierarchical nature of companies can mean employees are reluctant to give honest feedback – particularly in public – if they fear it might be interpreted as undermining their boss.

“A lot of these things aren’t difficult to adjust to, but firms do need to know about them,” Nagel adds. “That’s where local partners are so important.”

CBBC helps member companies identify opportunities in China, plan recruitment and partnerships, and find legal or tax advice. It also carries out company checks on their behalf and can provide temporary office accommodation.

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Produced by the 2018 International Business Festival, in partnership with Wordscapes.