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Doing Business in China

Our Business section mission is to provide you with a wealth of knowledge to jump start your first business endeavor in the PRC, or help expedite current projects. You will find information on just about any business subject related to China. If you do not find it here or do not find a direct link to useful information, send us a note and we will do our very best to add it to a future update.

We intend to give you the facts and information you need. But we will also try to make it "light" where practical and bring out the human nature issues. In addition, we will on occasion add a little humor and personal experience.

Business is booming in China. This is especially true for foreign enterprises who are entering the country in search of markets and low cost labor for assembly and manufacturing operations. Construction in support of this effort is going on at a fast pace along with construction in infrastructure, commercial and housing.

The economy in China continues to grow at a fast, near double digit pace.

Per Capita Income was 1223 yuan per rural resident and 3179yuan per urban resident in 1994 (Source: Chinese Embassy).

Foreign exchange reserve reached a record $140billion USD in 1997.

Inflation continues to run in the 10% to 15% range, down significantly from the 20%to 30% of just a few years ago.

China runs a significantly favorable trade surplus. The U.S. has a $50+ billion trade deficit with China.

Labor Force: 614.7million(1994), by occupation(Source: CIA Factbook):

• Agriculture and Forestry: 54%
• Industry and Commerce: 26%
• Construction and Mining: 7%
• Social Services: 6%
• Other: 7%

Exports: $151 billion USD.

Imports: $$139 billion USD.

Unemployment rate: Official government estimates place unemployment at 3% in urban areas. This estimate is probably significantly understated for urban areas and much higher in rural areas.

Foreign investment is a major factor driving the economic growth of the country providing much needed jobs and foreign exchange.

Most international company's quality and high moral and ethical values are well established and defined. Under no circumstance should the new entity in the PRC vary from corporate values and principles. Many companies live to the higher of the corporate guidelines or those prevailing in the country. In the PRC, the corporate standard will almost always be the higher standard. Your company can operate the PRC without sacrificing it's standards.

We have all heard stories and rumors bribes, kickbacks and special favors in the PRC. We have also heard these same issues in dozens of other countries. We will not address in this article whether and where this may occur. Rather the emphasis should be on maintaining the corporate values and ethics. While the playing field may not always be level, you can still successfully play. Worldwide, your customer base values your position on the issues. So, keep the standards high and unwavering.

There is an environment which encourages paying consultant and service fees in the PRC. You may need to solicit and pay for these services in order to set up the PRC operation. These are largely support and service costs that are simply unavoidable. In maintaining your corporate values you should be able to distinguish the valid and required ones.

While you Sleep: In the early days of a manufacturing endeavor in the PRC, the home office management may worry that information needs would take forever and because  the new factory was on the other side of the planet, the management of the home office could not get same day responses. Those concerns are quickly allayed by pointing out that a significant number of rush requests occur toward the end of the day and departments on the home office side of the planet could not turn over the request same day and sometimes would not even get the information request until the next morning.  The China factory however, can respond "While you  sleep" responding to your requests and having the answers on your desk when you arrive in the morning."  With the promise and challenge voiced, the China factory then can establish a track record of delivering on the slogan.

Tips: When presenting your business card to someone in China, it is far more formal. Americans are known to slide a business card across the table.Then with the tip of a hat or nod of the head, the introduction is over. In China, this casual manner of distributing business cards would insult the person receiving it. The proper presentation is to hand it with the face of the card facing the recipient. You hold the card in two hands on the upper left and upper right corner. Allow time for the recipient to read it and make a comment. Receive a card by taking it with two hands. Review and read the card, offer a positive comment.