Break into the China market — Useful tips from a Pro

I recently spoke with Mathew Benjamin from Asiarecon.com about doing business in China. China is now the world’s second largest economy and transitioning from a phase of investment into infrastructure towards a more consumption economy. This means there will be huge opportunities for foreign businesses, but the landscape must be understood before anything else.

Mathew provides some handy tips from his many years of experience, all summarised in this podcast episode. I’ll need to bring him back for another chat because I think we just touched the surface. An excellent chat, not to be missed.

About Mathew Benjamin

After graduation, Mathew Benjamin decided to go backpacking for a year as he tried to figure out what to do for a career. He later found himself in the property market where he spent five years and did really well.

At the end of his fifth year in the property space, Mathew decided he needed a change of scenery after being encouraged by a senior colleague to go out there and explore as many opportunities as possible.

At the time, he never would have guessed that he would find himself engaged in closing cross border deals all over Asia while working with leading tech companies and investors.

While doing some self-exploration after his corporate days and following the advice of his mentor, he decided to ride the wave and go where his passion took him. He has been on this journey for a few years and has had such amazing experiences.

Mathew left his corporate job before even starting his journey into the Asian market. Sometimes you need to follow what you are passionate about and let the opportunities open up as you go.

You have to have the courage to listen to your instinct since it’s at the core of survival in the business world. You have to be willing to do things other people wouldn’t dream of doing. You can’t keep doing what everyone else is doing.

Why Do Business in China

Mathew says that part of what drew him to pursue ventures in Asia and not the US or Europe was the potential for big business in Asia in the next few years.

The business case is glaringly clear: in less 30 years, 50% of the world’s GDP will be coming from Asia because 50% of the world’s customers will be in Asia.

Mathew used to vacation in the Hunter Valley, a major wine region in Australia, every year. And he was also aware that the French and Americans were doing well selling wine to the Chinese.

Since Australia has got a track record in the wine industry, he decided to explore that. He had a friend who had a large supply of high quality wine and they started putting things in motion.

Key Considerations for the China Market

Mathew quickly learnt that the feasibility of selling wine in China was greatly hindered by the fact that getting things running on the Chinese side was much harder compared to taking care of things on the Australian side.

Many parts of the rulebook on doing business in China are unpublished. This is compounded by the difference in the way things are done in various parts of China. There are difficulties of getting through Chinese immigration, acquiring licenses, and setting up a distribution network.

On the other hand, it is much easier for a Chinese person to do business in Australia than it is for an Australian to do business in China. This is quite unsettling for people who want to build awesome products or services while under the assumption that the 1 Billion people in China will magically buy their goods.

Even if the statistics say that 50% of the world’s GDP will soon be coming from Asia, doing business in Asia is still a people to people game. Simply put, while business risk is defined and minimized by contracts in the West, business in the East is about relationships.

However big the population and the potential for business in Asia, it is important to build the right relationships with key people in the value chain. These relationships are worth gold so put in the time and patience to nurture them.

There is a very thin line between having a relationship and doing business that it’s almost the same thing. In China, there are no distinct lines between social engagements and business. You will spend a lot of time socializing with the same individuals with whom you are doing business.

In short, your greatest investment as foreigner looking to do business in China is relationships and not physical assets.

Equip yourself with a basic understanding of Chinese history, values and culture. This will help you understand what drives their discretionary spending as customers. Culture plays a

People from the West trying to do business in China tend to stand out and often act inappropriately. Forcing your business card onto people will drastically affect how you are perceived.

You need to keep an open mind, be authentic, and lower your expectations. Most importantly, refrain from pushing the rules. You do not need to change who you are as an individual but you should be able to adapt.

Tech Industry Opportunities in China

If you want to do big business in China, you have to look at what the Government wants to achieve and position yourself accordingly.

In the recent times, the Chinese Government has been focused on uptake of technology and investment in innovation because of the expected economic dividends.

This strategic Government outlook makes the China tech industry a very lucrative area to invest in.
China has taken huge strides in the technology arena. The Chinese have leapfrogged in technology.

They did not wait to lay copper cable but went straight to WiFi. The transition from desktop computers to laptops was non-existent since they skipped straight to large smartphones.

The people of China have come to heavily depend on technology for most of their everyday activities. Point in case is the WeChat mobile app which combines social media, finance, travel and many other functions. It is safe to say that this app is replacing the business card.

So when is the right time to start doing business in China? With this rapid evolution of technology, the perfect time to break into the China market was yesterday. The next best time is now.

It’s time to do your homework. Head over to China on a fact finding mission and familiarize yourself with their norms and business practices. Keep in mind the considerations we have discussed above and commit to putting in the time and effort to get things done right.

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