Starting a Business in China

China's business environment can be challenging compared to Australia's. Before launching your business in China, do as much research as you can, you should also take time to become familiar with the culture, language and business practices of China.

Careful planning is crucial to any China strategy. Make sure you are fully prepared and committed before investing. The reality of China is often several degrees more nuanced and complex than new market entrants or investors initially expect. Pay careful attention to on-the-the ground risks, and remember that conducting effective due diligence is crucial to succeeding in China.

Fully assess your markets and risks. Invest time and effort in getting to know your customers and partners, your government contact points and stakeholders.

When incorporating risks into strategic planning, you should examine every level of risk, throughout all business functions. Often these risks are intertwined, and such analysis affords a bird’s eye view of the local business environment and practices. An integrated China strategy must therefore address risks that stem from both creating value and protecting it.

Find business partners that are open to fresh thinking and new ideas. They must have enough experience in the local industry and familiarity with differences in local consumer and industry segments to see how to carry through with new ideas. Above all, your business partners must possess resources and relationships that complement yours. But alliances come with their risks. Trust and regular communication through the relationship cycle are essential.

Why some Australian businesses fail in China

• Going it alone – lack of understanding and knowledge of the Chinese business environment, culture and regulations can be a core reason for failure.
• Limited preparation and research prior to entering China – many Australian businesses make the critical mistake of assuming that business in China is just like business at home. Do your research on the market, industry and primary competitors.
• Dealing with the wrong people – it is vital to connect and develop relationships with the key decision-makers. Negotiating with people in senior hierarchal positions is essential in Chinese business deals.
• Neglecting to seek professional, experienced help in China – a basic understanding of the Chinese regulatory environment is not sufficient. To launch successfully in China, businesses must engage professional services firms to help with legal advice on regulations and strategic issues such as marketing.
• Not understanding their Chinese business partner – many Australian businesses have failed to be proactive in developing and maintaining a relationship with a Chinese business partner. Time and money must be invested to help you understand your business partner's expectations and ways of doing business. Communication and setting clear expectations are essential. 

Want to learn more? Explore our other China information categories or download the China Country Starter Pack.