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3-things-to-consider-before-expanding-into-china

3 things to consider before expanding into China

Trust. That’s the No. 1 reason customers try out new stores according to a joint report by Retail Week and international law firm Pinsent Masons. Now, think about asking customers in a different corner of the world to buy what you’re selling. Trust, then, becomes an even bigger selling point.

For many entrepreneurs, expanding internationally is just a matter of logistics. Setting up a business location, hiring employees, getting a production chain going, finding people who know the language — these are considered chief difficulties when moving your business to another part of the globe.

However, the entrepreneurs who think this way are usually the ones whose expansions ultimately collapse. For example, while business might be an increasingly global enterprise, if you try to simply take the American business tactics and carbon-copy them over to another country, you’re likely in for a rough transition. [look at McDonald’s in China – ed]

This is especially true in a country like China, where western cultural influence is minimal and the potential for misunderstanding is high. For a country like this, it takes more than knowing the language — you must understand the culture.

Cultural ignorance is far from bliss

It’s no coincidence that so many globally successful companies have at least one prominent C-suite leader who’s either an immigrant or the child of immigrants. An international perspective leads to a better understanding of what it takes to become successful in another country — and a greater sensitivity to where potential cultural pitfalls might lie.

It might not seem like a big deal — ‘business is business’ the world over, right? But one minor breakdown within your new team could lead to misaligned business goals, misunderstanding customers, a scrapped partnership, the loss of an investor, or even the alienation of an entire consumer base.

There are three major areas where subtle differences between countries can lead to major problems down the line. Learn why these matter in order to gain a better idea of what it takes to create a successful global business.

1. Communication

It’s not enough to know the Chinese name of an English term; you have to understand the cultural meaning behind it. In both the U.S. and China, communication is built on a foundation of trust — but how that trust is earned (or lost) subtly differs from country to country.

In the U.S., everyone usually starts with a baseline of trust, which can then be lost as action and words dictate. In China, trust is never assumed — it’s always earned. This means initial business dealings with many Chinese companies have the potential to fall apart due to a simple miscommunication or misunderstanding.

Don’t overpromise in China. Stick to what you know and what you can actually deliver. If your reliability doesn’t shine through your actions, you may find yourself with no one in China willing to take a risk on you.

2. Culture

You’ve probably heard before that American culture favours individuals and Chinese culture emphasises teams, but many people underestimate just how much that affects a person’s daily actions and long-term goals.

This isn’t just about misaligned business goals, though it can play an important role in a vision for the future. A cultural rift can be made from something as simple as not understanding what people consider private vs. public. What’s seen as honest, straightforward conversation in the U.S. might be off-limits in Chinese discourse.

Failing to grasp a country’s culture could also mean leaving business opportunities on the table. In China, for instance, business is often conducted at dinner instead of at the office because a restaurant is considered a more leisurely space — a location more conducive to creativity and brainstorming.

Understanding differences in culture provides insight on viewpoints foreign to your own. Instead of taking offence (or causing it), approach things from a realisation that it’s just a matter of different perspectives in order to mitigate or avoid bad dialogue.

3. Ideology

It turns out that common sense isn’t as common as many people believe. What is taken as a given in the U.S. might be (and often is) totally out-of-the-ordinary for people in China and vice versa.

For example, when Chinese people talk about things in terms of being rich, powerful, or influential, it may have a different meaning or hold different significance than it does elsewhere. Chinese values aren’t ruled by Western logic; they’re influenced by their own history and the lessons handed down by family and the community.

Small, simple misunderstandings can lead to one partner underestimating the other and a business deal falling apart. In my experience, when entrepreneurs look for a partner in China, it often dissolves because the expectations of both sides are very different. If you’re not willing to compromise or adapt to the ideologies of the country you’re trying to do business in, there’s a good chance your venture won’t survive there.

To become a successful international company, you need to become an internationally minded person. Otherwise, you’ll find yourself grounded stateside for a very long time.

Note: even though the U.S. is given as a primary business example, the information can be used in emerging markets as well.

Feature image: M M via Flickr.

Author Bio

Kevin Xu
Kevin Xu is the CEO of MEBO International, a California- and Beijing-based intellectual property management company specializing in applied health systems. He also leads Skingenix, which specializes in skin organ regeneration and the research and development of botanical drug products. Kevin is co-founder of the Human Heritage Project. More