Sunday, 25th February 2018

Opportunity Knocks

Posted on 02. May, 2011 by in MARKETING, OPERATIONS

May you live in interesting times.” It’s an American maxim often mistaken as a Chinese curse. It is used to imply that the current times we live in are unprecedented and chaotic in nature. Surely, since the great depression no age has been more fraught with insecurity than our own present time. The economic crisis that originated from America’s recent financial meltdown has left the US business landscape in a precarious state, but, it is from this uncertainty that some of our greatest opportunities may arise. At this very moment, China, that rising star in the East, is fertile ground for American businesses to find what they are after.

Unless you have been in a cryogenic slumber since the year 2000, you already know that rapidly growing China is one of the most important markets in the world. But how can an entity located in the Metro DC area benefit from doing business with China? We hope that the following will guide you in understanding the possibilities and opportunities of doing business with the new land of opportunity.

As we see it, there are four possibilities for your business:

China Expansion
Unless you are a large to enterprise–size company with deep pockets that can afford to ride the slow boat of success in China, this is not for you. Many companies as big as Vodafone, Best Buy, Google and Barbie have tried and failed to succeed in mainland China. The only thing that should interest you in this article is the mistakes made by these well–known companies. They all thought that they could take their cookie–cutter business template that worked in the western hemisphere and apply it to China. They were wrong. When doing business in China, one needs to listen rather than talk.

The need to crack open the China market has become a matter of life and death for some companies. Take for instance, Groupon, whose management feels that if they don’t enter the Chinese market now, they will fail to become a global entity and possibly soon face much larger competitors from China.


Getting Your Feet Wet
You are a small to medium size company with a unique service, product or a solution and you would like to learn more about its potential in the fastest growing market in the world. If John B. L. Soule were still alive today, he would no doubt say, “Go west, young man, and grow up with the country.” Nothing can educate you better than visiting a place and meeting locals (but of course reading this magazine is a great start). “But how do I go to China?” you might ask. Being located in DC, you are in luck. You can contact the Arlington Chamber of Commerce, which offers affordable ways to visit China. You can pay as little as $2200 for a 9 day trip that includes airfare, food, tours and 4 to 5 star accommodations spanning 4 cities. Trips like these will help you become more comfortable with visiting China and help you identify your opportunities without having to spend large sums of your hard earned money.

Useful Contacts for Americans in China

Beijing:
United States Embassy Ambassador Jon Huntsman
No. 55 An Jia Lou Lu 06003 Beijing 100600, PRC
Tel: (86) 10 6532 3831
Fax: (86) 10 8529 6929 3297
Website: www.usembassy-china.org.cn

Hong Kong:
U.S. Consulate General
Christopher J. Marut, Acting Consul General
26 Garden Road Central, HK, China
Tel: (852) 2523 9011 Fax: (852) 2845 1598
Email: information_resource_center_hk@yahoo.com
Website: http://hongkong.usconsulate.gov

Shanghai:
U.S. Consulate General Beatrice Camp, Consul General
1469 Huai Hai Zhong Road Shanghai 200031,
PRC Tel: (86) 21 6279 7662
Fax: (86) 21 6279 7603
Foreign Commercial Service
Tel: (86) 21 6279 7630
Fax: (86) 21 6279 7639

Made in China
You had your Eureka moment. You are certain that your product idea is the best thing since the fortune cookie. You just need to find a place where you can affordably manufacture your product. USA’s manufacturing output is 25% of the world and declining whereas China’s is around 35% and growing fast. China’s wages are a fraction of the salaries of U.S. workers even in the high tech field.

Our guess is that you will look for a manufacturer in China for your product. But where can you start? We suggest that you begin with the several free resources available, which include government organizations like The China Council for the Promotion of International Trade and The China Chamber of International Commerce. You can also use commercial websites like AliBaba.com which provides you with thousands of options. Once you select several candidates, travel to China and visit the factory floors. Meet the people and make sure that they are who they say they are. Cross check business cards, addresses, phone numbers. In China, “Non-disclosure Agreements” mean very little. Most experts recommend the use of “Terms of Engagement” and an “Authorization to Manufacture” instead. And always ask for references.

Attract investment
The economy is getting much better in the U.S.. Banks are even starting to loan money to businesses once again. But the recent economic crisis left a lasting mark on our nation. There is no shortage of money, but most U.S. companies, including the VCs, are investing abroad. China on the other hand is high on American ingenuity and is investing heavily on U.S. companies. There are Chinese sovereign wealth funds, large financial institutions, large corporations, indigenous investment funds and high-net-worth individuals, each of which is making investments. Many Chinese firms, flush with cash or squeezed by competition, are also casting abroad for new markets, technology and product lines. This year Chinese companies are expected to make more than $5 billion in U.S. direct investment. Being close to DC, you are in luck. You can start your research at the Chinese Embassy. If you can sell the value of your company to them, they will help you attract potential investors to your company. You can also work with The Virginia Economic Development Partnership that also has an office in Hong Kong. The partnership recently worked closely with Governor McDonnell to attract $21.2 million investment to Virginia. Another great resource is the Maryland International Incubator that opened its doors in 2009. Partner companies include Shandong Province Liaison Office which looks to identify businesses in Shandong as candidates to establish operations in the U.S.. Perhaps a direct investment in your company is a viable option for their candidates.

Regardless of what you end up doing, take your time and remember the Chinese proverb “He who hurries cannot walk with dignity.”

Post By Murat (7 Posts)

Murat AksuMurat Aksu is a global executive working for one of the largest business and technology consulting firms in the world.  He has 20 years of experience in sales, marketing and forming strategic alliances.  In his younger years, he has also worked for Playboy in Istanbul, Turkey (writing articles only).  Murat is also a regular contributor to I AM Modern Magazine.

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