Selling goods and services to companies and consumers in China is not an easy task for foreign firms. Here are some mistakes to avoid.
Based on an interview with Frank Lavin, CEO of Export Now, a company that assists Western businesses that enter the Chinese market, Darren Dahl (writing for American Express Open Forum), describes six mistakes that foreign companies should not make:
- Doing Nothing New — “The most common mistake companies make when entering international markets is that they don’t do anything new, says Lavin. ‘They think that whatever works domestically will also work internationally,’ he says. ‘They don’t look at pricing or brand positioning or the competitive map. There will be gaps and you need to do some analysis to close them.'”
- Not Embracing E-Commerce — “Lavin says that while the U.S. has a mature brick-and-mortar merchandising system that’s been around for two hundred years, Chinese customers primarily shop online. ‘E-commerce is often the icing on the cake in the U.S.,’ says Lavin. ‘But in China, e-commerce is the cake.'”
- Failing to Market Differently — “Lavin says getting your products there is only the first step. ‘What we like to say is that distribution ain’t marketing,’ he says. ‘You’ve reached the starting line, not the finish line. Companies must realize that when they’re entering a new market like China, they are essentially starting over when it comes to building up brand awareness and goodwill among potential customers.”
- Trying to Do It All Yourself — “If you’ve made the decision to sell in China, then you should also be willing to partner with other businesses to make that move a success.”
- Obsessing Over Currency Fluctuations — “One thing you don’t have to worry too much about when selling in China is the fluctuation of global currencies. Lavin says that if you’re selling less than $3,000 worth of goods a day or less, you can simply make minor price adjustments to your products as needed without worrying about any kind of currency hedge strategy. Then again, if you are selling upwards of $50 million worth of goods a year, you might want to think about putting such a plan in place.”
- Starting Too Fast — “Lavin suggests that every company start with what he calls a soft launch, where you begin selling a fraction of the products you might otherwise be doing in the U.S. as a way to work the kinks out of everything from the warehouse.”
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23 Replies to “Avoid These Mistakes When Selling to China”
We have to admit that China has become one of the biggest export company for America. Those 6 things listed in the article are very important to companies when they want to enter China market. Situation changed a lot in China since Chinese Economic reform. Many countries try their best to enter into this huge market to get profit. Companies really need to pay attention because the differences in history and culture. Be more careful before entering into a new market that can make things more accurate.
Kentucky Fried Chicken is a very successful example to support this article. The KFC restaurant in China is quite different from that in U.S. In order to achieve localization, they even sell some traditional food in special holidays. The decoration of restaurant is Chinses style. The menu is different and is changed more frequently. It is more popular in China than here. Except what was listed in this article, businessmen also need to consider the political environment in China when they decide to enter this rapidly developing market. I have a friend who is an international business analyst of the biggest pharmaceutical company in long island. Recently he is working on analyzing a new tariff policy launched by Chinese government. Their biggest distributor in China cut off several orders because this policy. Their company are losing sales in China due to the uncertainty of policy. It is not easy to conduct business in a very different country.
Before venturing into a new market, especially international markets, any companies should research and find out about the market situation and trends that took place in that specific country. As cultural difference matter to a large extent and could determine whether a firm will succeed or not. As people living in different countries have different culture values and religions beliefs that could affect the food they eat and even products they would buy, thus it is critical and essential for the product promotions and distributions.
Determining cultural differences is very important for a company when looking to go into a new market because this is what will make or break the organization. International markets can be very different when comparing them to the markets within your country because of the cultural values of each area. These six things in the article are essential in venturing into a new market because it shows companies the important factors in order to succeed.
It is important to note how different countries function and what translates to them. In order to get business done in any aspect, both sides need to be on the same page. It’s also important to examine the cultural differences and anticipate whether or not a firm will succeed.
When a company enters a foreign market, not just China it is important to make sure that your product will find success and that you are willing to change things to make them want to buy that product. With China being one of the biggest countries in the world it is important to get your foot in the door because if you do it could make your business very successful. This has been proven to work
In the business world, especially enter to a foreign market, communication is imperative for the successful execution of daily operations. Understanding cultural differences and overcoming language barriers are some of the considerations people should have when dealing with the business with people of various cultures. Often business deals are lost because the parties involved did not take the time to learn about their each others’ cultures before interacting. Those six things in the article are the important keys to succeed.
I personally agree with No. 1 and No. 4. Not only China, Eastern countries have differences in many aspects when compare to western countries. For No.1, since the culture, customs and values are different, business goes into China have to be changed. For example, when Yum! and Burger King go into China, they also update their menu to match Chinese customers. For No.5, since the value in China is different, we emphasize the relations and corporations between humans. Therefore sometimes if foreign firms want to do business in China, they need to hire local professionals to corporate with other firms, or communicate with government.
One of the most important things during a company entering a new foreign market is think global but act local. This is one lesson I learned from Travis Kalanick, Uber’s co-founder and CEO. I think Uber is a good example to practise these 6 things. They bring a new model to solve Chinese people’s commute problem and build the business on mobile internet. They hire local Chinese to be their employees and Uber China is not a subsidiary company of Uber America. This is why I am optimistic about Uber in China.
In Chinese culture ”to wear a green hat” is the Chinese symbol of a cuckold. So, do not sell Chinese a green hat please.
In my opinion, globalization has narrowed the cultural divide, and these days the Chinese are experienced enough in dealing with foreigners to shrug off indiscretions. What really matters is a friendly attitude and a patient manner.
Understanding the market the business plans on operating is very important in order to be successful. As mentioned, that coming up with something new for pursuing a new market is important, as a product which might be well known in domestic country might fail in another country, So, understanding product positioning is important. So, in order effectively do business abroad, the company should research on the country, target consumers, pricing strategy etc.
There is no doubt that China has become one of the biggest and the most attractive export market for America. Those 6 experiences are very useful and important if the US and other countries’ companies want to enter Chinese Market. In addition, I think US companies who want to expand their international markets should pay more attention to the different local culture and local customers’ taste.
The tips listed in the post are very important for those company which want to sell their product to china, as we know, there are some big companies and can do well in most countries in the world but they in China, they didn’t do well. They must understand the rules of China before trying to sell their products to China.
Recently I did a case analysis of Chinese internet industry in the other class. The fact is that Chinese internet industry has a very high barrier and all pioneers are local players. This situation can conclude for two reasons: cultural differences and government policy. But now in the Chinese market, seldom business can be irrelevant from internet industry. So I would like to give a tip for foreign companies who are interested in the Chinese market, which is building a corporate relationship with Chinese local internet players and looking for some support.
I couldn’t agree more with this article. One thing which is important to understand when going to another country, regardless for business or not, is that there is a different culture and atmosphere presented compared to America. It’s necessary, especially for business, to understand that culture and see how things work in that country, in order for the business to work and stay for a long period of time. For example, how e-commerce is a big thing in America, but even a bigger thing in China. Another great point that was made was that you cannot do it all and should have a partner. It’s never a good idea to walk into something head on, especially if you’re unfamiliar with it. Doing business with someone who knows the customs and rules of China, would definitely help.
I think that these tips are important to keep in mind for not only doing business in China, but for doing business in other countries as well. In order to have a successful business bridge with another nation you need to fully understand their culture and what you have to offer them. You need to show that what you have is different, fresh and new. It won’t take overnight, but after a while, all of the effort you put into it will return in success or a learning experience.
I think these tips of business are very useful for business anywhere in the world. It is great that in China, they apply. When starting a business in another country, it is important to know the culture provide according to that demand. Before even going to the country, when making research they should think of something new that could work in that specific country.
When a company decides to go internationally and do business in other countries, there are a couple of very important tips for companies to remember. The six that were laid out in this article were laid out in a very good and understandable way. We, as Americans, often do not think about a lot outside of America. We often do not consider cultural differences and how they can effect how companies will succeed or fail in other countries.
I think this article is important to understand. Doing any business internationally you have to put into account that not everything that works in your country will work in another. There are different beliefs, attitudes, values and way of life. Many things are different in each country. So when doing business internationally it is important to understand these 6 things to be successful in any business abroad.
The first and most important thing to consider when expanding internationally is becoming familiar with cultural differences. I like the comparison of e commerce being the icing on a cake to conducting business in America while in China it is the cake which changes the allocation of funds that go into communications, web design, easy shopping experience, etc. You also have to see how your product or service meets demand in any foreign country as people around the world fall into different demographic and psychographic categories and have different preferences.
I personally liked this article as I have always wanted to become an import-export trading entrepreneur. And when it comes to import-export business, then obviously dealing with China would come into play as they are the largest exporting nation in the world. This article gave me those insights which I might have had never thought of in past.
Everywhere around the world is different when it comes to culture, and norms. It’s especially interesting to learn about the business world in other countries. This list provides great tips for anyone who has to do business with China and by learning things like this, a business can be internationally successful.