Nihao Global - Case Study

Many entrepreneurs have rushed into China since it opened its doors in 1978, tempted by opportunities to get rich quick in this fast- growing market. While professional services firm Nihao Global might look like an overnight success story – making a six-figure profit in its first 12 months of operation – it actually took years of research and in-market knowledge to get to that stage.

Nigel Blair, President of Nihao Global, knew China offered great opportunities, but it took four years of research and planning before he felt ready to launch the business in 2013. Although he had extensive experience in establishing and conducting business in Asia, he recognised that China was unique. "So many foreign companies entering China assume it is just like their home market or other regional markets. But it isn't. They tend to fail due to a lack of a real understanding and knowledge of undertaking business in China, which leads to incorrect or ill-informed decisions," he said.

Before setting up in China, Nigel took every chance to learn about the local market, culture and business environment. He went on several Australian and state government trade missions to China, proactively engaged with local and Australian businesses there, including the various Australian Chamber of Commerce (AustCham) organisations, and spent time networking and building connections.

Through his research, Nigel discovered a number of opportunities associated with China's growth. "I started thinking 'What does an Australian or a foreign business person need when they are in China? What are the challenges that they experience?'"

With more Australians and other foreigners expanding their businesses into the country, there was a rising demand for high-quality interpretation and translation services. There was also a need for other professional assistance, such as market research on local Chinese companies for partnerships, and personal assistants for those visiting China on business trips. The concept of Nihao Global was born.

Key learnings

  • Strategically review the market and identify a gap -– If you're considering China, research
and learn about the market and think ahead to identify emerging opportunities. Nigel Blair spent four years attending trade missions and learning about business in China before he established Nihao Global. 
  • Engage vital Chinese market insights – It is crucial to consult those with local knowledge that understand the market well. If entering into a Chinese partnership, ensure your partner is the right fit for the growth of your business. 
  • Effectively navigate China's business regulation environment – The constantly changing nature of Chinese laws and regulations is an ongoing challenge. Nihao Global found the best way
 into China was through Hong Kong's more business-friendly environment. 
  • Don't cut corners, reinforce quality – It is easy in China to
cut corners to maintain growth but don't risk damaging your reputation. Have detailed quality assurance practices in place.  
  • Constantly reinvent yourself – In one of the world's fastest growing markets, it is vital to keep up 
to date with the continuously evolving environment. Know what your competitors are doing and what clients want.

Strategically review the market and identify a gap: do your research, understand the Chinese context and find emerging opportunities.

"The key was identifying a gap and positioning ourselves strategically to address it," Nigel said. Nihao Global is now represented in 19 major Chinese cities, with more than 300 bilingual contractors with a range of specialities and experience providing tailored services to a variety of industry sectors. Clients have grown to include the Australian federal and state governments, and a mixture of Western businesses, business councils and Chambers of Commerce from countries including New Zealand, Canada, Israel, the UK and the US.

"Don't underestimate the restrictions and time involved in setting up a business in China."

Engage vital Chinese market insights: consult those who have extensive knowledge about the local context and consider a local partner.

Having developed the idea for Nihao Global, Nigel set about finding and engaging a Chinese partner who would bring vital local experience and presence to the firm. "You can't just set up in China with your own Australian employees. You need local contacts on the ground and therefore local managers in China," he said.

The choice of a Chinese business partner is critical – but Australian businesses should not dismiss unconventional routes in finding the right partner. "I knew what kind of person I was after – one that was young, passionate, got on well with Australian business people and was able to handle numerous tasks under pressure," Nigel outlines. He found that person in Janey Lee, now Nihao Global's Chinese partner and Executive Director, who was the guide and interpreter on a Victorian Government Trade Mission in China. "I observed Janey for a week interacting with a variety of Australian businesspeople where every scenario that could possibly happen did – lost passports, missed flights, business deals. I got to see her work ethic and passion for her job – I knew she would be perfect to get Nihao Global off the ground."

Once the partnership was established, Nigel designed strategies to develop Janey's skills and ensure the success of Nihao Global. This included bringing her to Australia for a few months to understand commercial operations through practical, on the job training at his other companies, and attending an intensive language course. "Investing in developing your Chinese partner is critical to not only develop their knowledge of business in Australia but also expand their management expertise," he outlines.

Another key to the success of the partnership was aligning the business with Janey – giving her not only responsibility for the Chinese operations in finding translators and interpreters, but also linking her to the business through financial investment. "I made the expectations on her very clear from the beginning – I would fund the initial investment and in return, once we broke even, she would double her salary and be a shareholder. This made Nihao Global Janey's company too – therefore its success or failure would be based on the amount of effort she was willing to put into it," Nigel said.

The next challenge for Nihao Global was finding contractors in China to provide the services and developing a client base. Using the strengths of each side of the partnership, Nigel was in Australia handling the practicalities associated with setting up a legal entity while Janey was attending AustCham events and business forums, trying to find potential clients. She was also busy travelling across China recruiting graduates of language degrees through local connections.

"This point of building a new business can be very discouraging for your Chinese partner as it is not only a learning process but often they can feel disconnected and demotivated in not seeing instant success with signed contracts," highlights Nigel. Australian businesses establishing a partnership in China should note that constant support, trust and communication are crucial, especially when the partners are in separate countries. Nigel added: "Building trust isn't an instant process and is essential in doing business in China, but a lot of time and communication is required."

Effectively navigate China's business regulation environment: be aware of continuously changing Chinese laws and regulations.

Chinese laws and regulations, including those associated with foreign ownership and investment, tax, employment and repatriation of funds, are very different to those in Australia. They also are constantly changing, as the Chinese government moves to make foreign investment an easier process – a factor new Australian businesses sometimes struggle to keep up to date with.

Nigel was fortunate in that he had previously worked in China, but he recommends that those with little or no experience of the region seek help to ensure they make the right decisions from the beginning. "In addition to seeking professional advice, talk to other Australian businesses and ask how they initially set up their business in China. Information on what others did and experienced can be very useful, especially when you don't know where to start," he said.

As Nihao Global was a start-up business, Nigel opted for a partnership model. The company's headquarters were set up in Hong Kong with the Chinese entity engaged for provision of services. This model – often used by foreign businesses wanting to enter China – gave Nigel the security of establishing a company under English law as well as the advantages of tax benefits and easier repatriation of profits.

"Don't underestimate the restrictions and time involved in setting up a business in China," he warned with numerous trips required from Australia to Hong Kong and China during this initial phase. "Although it is a costly and lengthy process, it is manageable and necessary."

 

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