How to Survive and Thrive in China

Use this advice to expand your logistics business into the complex but lucrative Chinese market.

You’ve decided you want to expand your business into China. The growth opportunity seems too good to pass up, but the list of challenges can be daunting. You may encounter a language barrier, cultural differences, a range of compliance issues, and difficulties in building a network and the time difference. However, accessing this market could be a game changer for your business. Henry Ye, WiseTech Global’s general manager for greater China and head of corporate development, Asia, offers this advice for expanding your logistics business into the complex but lucrative Chinese market.

Growing Market, Growing Pains. China is the world’s largest exporter and is second only to the United States in terms of imports. Its rapidly growing middle class is larger than the United States, with over 100 million by global standards in 2015 according to Credit Suisse. This trend, combined with a desire for foreign products by Chinese consumers and a market that is rapidly moving from manufacturing to a service-based economy, indicates benefits for companies looking to establish themselves in the region. Accessing this opaque market is easier said than done. Customs and compliance rules differ between ports and nationwide systems may be supplemented or completely replaced in certain localities.

Connections Are Everything. Navigating this complex web of regional variations requires local knowledge and local networks. Guanxi, sometimes translated as connections or relationships, is a central part of doing business in China. Simply put, building a network is essential. This makes finding a partner in China, or a strong network of partners, important for newly established businesses. Do your homework, look for international connections, and confirm reviews and recommendations independently. International companies opening businesses in China may begin by setting up a Wholly Foreign Owned Enterprise (WFOE). However, taking this leap without the benefit of local knowledge can present a risk.

Have the Right Systems. Work closely and stay connected with your network in China, no matter what stage of business cycle you are in. Having an integrated, internationally recognized system can be an effective first step in managing your relationships and ensuring you can collaborate anywhere in China and around the world.

Overall, patience and investment in networks should drive your efforts to establish your business into China. Building a network and doing your research will help you manage the risks and seize the opportunities that the country can offer.

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