Lessons learned doing business in China

My wild adventure in China didn’t start with business but because of a girl, Italian not Chinese, who pulled me all the way here after my first startup in Italy. My willingness to try new experiences, PhD in Robotics and eagerness to learn from the local culture has put me in the perfect position to do business in China. After a stunt in a University, hand in a startup, and an ongoing role in a multinational company, I think I’ve learned a few things in business that people should know.

You (definitely) need a Chinese partner*

If you do not have a fluent grasp of the Chinese language, having a Chinese partner is a necessity, or at least highly recommended for talking to local Chinese partners, suppliers, institutions, etc. for operations, sales and business development. In my experience, 99% of smaller grassroot organizations such as local NGOs will only speak mandarin and due to their close relationship with the government, it’s hard to access as a foreigner. Talking to Chinese robotic suppliers instead is a bit easier as they have likely dealt with foreign clients. However, the problem persists when maintaining the relationship in the long run. Regarding sales, If your market is in China I don’t recommend, as a foreigner, to do the sales yourself. Besides the already mentioned language barrier, there is the secret power of “guanxi”: the extreme version of business networking. The word-by-word recommendation and personal relationships are fundamental; being Chinese will bring more trust and help your business build stronger relationships.

*Extremely important note, unfortunately there are also many (scary) stories of foreigners being ripped of by his/her Chinese partner.

Internet and marketing number 1 rule: don’t think like a westerner

This is probably one of the first things you notice when you arrive in China, many website we normally use are blocked (not only Google, Instagram, Linkedin, etc.). Not only does the Internet have a different network infrastructure (eg. 4G modem, frequencies, China Firewalls etc.), the marketing ecosystem (eg. Wechat > website) is also totally different. If you want to market in China, follow Chinese regulations. It’s better to let a Chinese partner (or a fluent speaker) to manage the back-end and infrastructure.

There is a big market for everything in China

Sure but…why is it still so hard to make money? Yes, the Chinese market is huge, however:

• Competition: The problem is to understand why your traction is so low. There are either 100 other startups already working and launching the same product as you or it’s probably a product without a market.
• It’s insanely fast: Restaurants and bars regularly open and close within a couple of months. Either you hit the right wave at the right time and excel, or you die. The F&B business is particularly difficult. People change their habits, new offers pop up, and there is always the rush for new things. Go fast or go home.

The government pushes forward the business, not you

The bottom-up approach for high tech, doesn’t work or is at least very inefficient. Push for innovation does not come from big geeky dreamers in a garage, It’s the government that defines and pushes for these goals, connecting stake holders and “allowing” the “approved” businesses to grow. The best way to start a business is to align yourself with a university or innovation center that already has a relationship (aka good guanxi) with the government. They might help with the initial innovation fund to prototype your idea, connect you with partners and clients, or maybe even invest. A good relationship with the government is always important.

Foreigners make business cooler and more international

I was surprisingly invited to a very important meeting between big industrial partners that were “interested in my background in robotics”. Wow me? Really? Sure! But then I found out no one was actually paying attention to my presentation and they cut me off when the real (Chinese) business meeting began. So in the end I was just the PR show pony on their wechat article post. Worth it? Of course. Make the most out of these opportunities as you get to connect with the big shots while drinking expensive wine, just because you’re a foreigner with a PhD.

Emails vs WeChat

When it comes to managing projects with your internal or external team, I feel emails are too formal for some or they just don’t use it. Still a mystery for me. Do yourself a favor and make a Wechat group for every important business interaction. You can thank me later.

Understanding the hierarchy

If you have a problem. Go directly to the top of the chain. This will save you days of back and forth with the less senior employees.

The face

This rule is a bit ridiculous but also critically important: the boss can never lose face. Losing face means admitting to your faults and accepting criticism. If you challenge your boss and s/he loses face in front of a client, partner or anyone important, you are done for. Just grit your teeth and take the blame.

The Chinese are practical

This is probably a note in general for business, I like Chinese people because they are practical. They care less about hopes, intentions, approaches, and dreams as they place more importance on how you can work together and what value you can bring. Easy, cut the bullshit and show your real value.

Picture evidence

There is a say “pictures or it never happened”. Can you say you went to the beach if you didn’t take an iconic sunset picture? Where are the pictures from the Michelin restaurant that you talked about? In China they take it to the next level. One day a guy who had to cancel our business meeting. He accompanied the message “Hey Gab I’m sorry I can’t come to our meeting today, I had a horrible accident” with a pictures of his bleeding arm a window broken. A bit too much but that’s how much evidence he had to bring to the table.

Show effort! Speaking broken Chinese is better than nothing

My Chinese is not the greatest (HSK2 at best), but I can break the ice, make them to understand that I am happy to communicate, and I care to make an effort. I think this is good for every country, don’t forget you are a foreigner in their country. Don’t expect them to know English at all. If you make the effort, it reduces expectations, lowers pressure and everything will go smoother.

Being nice and honest can move mountains

A good example comes from when I was trying to get an invoice for a refund on Taobao during 11/11, the busiest, craziest period for e-commerce in China. Instead of pestering them with “where is my fapiao (aka invoice),” I laid down my cards bare in a simple and understandable way. “Hey, I am really sorry I am foreigner and I don’t understand the process. I am happy to meet you, since you seem nice and polite and understand this is a busy period. I am sure you can help me to get this invoice. It’s really important for the company I work for in order for them to refund me the money I spent on your product. Again I apologize. Thank you so much, don’t hesitate to tell me how I can help” (Of course this was all written in Chinese). I probably sounded like an idiot, but I didn’t care as I solved my problem faster than if I tried to keep my ego.