Entering China: No One Said It Was Easy

Look before you leap: Here are some tips, especially with regard to the supply chain, to follow before you set up shop in China.


Companies considering a move to China should be encouraged but should not move hastily. Extensive planning is crucial. For example, businesses must plan for dealing with sourcing issues, especially long-distance sourcing to manage the global supply chain. They must take their time to understand the Chinese market and do their homework to avoid mistakes. They need to have experience, and they must pick the right partners who have a local view. There's no fast way of doing it without risking a very expensive mistake.

Companies establishing operations in China need a solid strategic business plan that focuses on growth, not just cutting costs. They should establish a high-level senior staff in China on site to manage the company's China operations. They need a full-time C-level staff in China to get things up and running and then to maintain operations and manage growth.

The Culture Gap

The Chinese work ethic is remarkable; they work hard and aggressively, are very quick to learn business techniques and are very friendly and kind. Businesses entering the country, however, should set strict criteria for hiring Chinese employees, taking time to interview all prospective candidates in depth to ensure they meet the criteria.

City infrastructures in China are new and sometimes have difficulty keeping up with the demands of business. In Shanghai, for instance, the government contacts the manufacturing plant and informs the company of the hours of the day it will receive electricity. Officials may say, You have to work from 10 p.m. to 6 a.m. You have power during those hours, and it's cut off to you the remainder of the time, while another plant is working from 6 a.m. to 2 p.m. What America built in 200 years, the Chinese are trying to build in 10, and it often strains their resources.

The transportation infrastructure in China also is new. For example, some companies use buses to pick up employees at their homes at the start of the work day and return them home at the end of their shifts. Outside the major cities, people still transport goods by bicycle; the use of trucks is limited.

With proper planning, solid partnerships, flexible business systems and products, and an ability to adapt to the country's cultural demands, businesses will discover enormous opportunities in China; and China will benefit enormously from the enterprises that establish their operations in the world's largest and most eager market.

About the Author: As Vice President, Global Business Development for the Discrete Solutions Group of Infor Global Solutions, formerly Agilisys, Wolfgang Greil leads automotive sales worldwide with a focus on the organization's Asian strategy, global supply chain strategy and new product offerings.

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