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Doing Business in China: Articles & Reports

Resources for doing business in and with China

China Business News

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CHINA REPORTS

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Archive: Articles & Reports

China Success Stories

A widely read English blog featuring articles, interviews, book reviews, and other material about doing business in or with China. Full of articles for all who are serious about their China related business. Free newsletter.

Smart China Sourcing. Sponsored by Global Sources.
Features articles, interviews, and tips on best practices for importing from China. Sections include: Evaluating New Suppliers; Managing Product Quality; Trade Shows; Negotiating; Paying Suppliers; Legal/IP Protection; China Competitiveness; Outsourcing; Shipping; Travel; Supplier Relationships; and Cultural Considerations.

New Resource: "All Roads Lead to China™".
A series of articles on doing business in China. Written by Richard Brubaker (China Strategic Development Partners) and other experts, these articles capture the reality of doing business in China. The articles are included in FITA's China Business Guide.

China and India's Financial Systems: A Barrier to Growth. McKinsey Quarterly, Vol.11, January 2007. Free Registration.
"Reducing government interference in the financial sector and strengthening its market orientation are essential to make it allocate capital efficiently and meet the needs of savers."

Selling in China. Special Section. Knowledge @ Wharton. October 2006.
"China's 1.3 billion consumers are at a crossroads. They are embracing new economic ideas and habits, and devouring goods that have long been unavailable, unaffordable or forbidden. At the same time, they are part of a culture and an economic system that remain quite different from those of developed countries." Full Report.

Report from China: The New Entrepreneurs. By Sean Silverthorne. HBS Working Knowledge, October, 16, 2006.
"When a delegation of Harvard Business School faculty visited Chinese entrepreneurs, they came away with something unexpected: the start of what could be a fundamental rethinking of how entrepreneurship works."

Lesson's from a Global Retailer: An Interview with the President of Carrefour China. McKinsey Quarterly. July 2006.
"In this interview, Jean-Luc Chéreau, the head of Carrefour China, discusses the French retailer's experience since opening its first Chinese store, in 1995."

The Value of China's Emerging Middle Class. McKinsey Quarterly. June 8, 2006.
"As global companies have entered China, many of them focused mainly on serving its urban-affluent consumers. However, if these companies continue to use this strategy they risk missing the real opportunity—the emerging middle class."

Understanding the Chinese Consumer. By William McEwan, Xiaoguang Fang, Chuanping Zhang, and Richard Burkholder. HBS Working Knowledge. April 24, 2006.
"The Gallup Organization's ten-year study of the consumer market in China dispelled myths and identified opportunities. In this excerpt from Harvard Business Review, Gallup executives explain that products must appeal to the emotions of the Chinese as well as their needs." See "Inside the Mind of the Chinese Consumer." Harvard Business Review: 84 (3), March 2006 p68-76.UF+ Icon

China's Five Surprises. By Edward Tse. Strategy+Business. Booz, Allen, Hamilton Resilience Report No. 28.
"In the world's fastest growing economy, the last 10 years are not the best guide to the next ten years."

Country Briefings: China. Economist.com
"China introduced market reforms in the early 1980s but began emerging as a real economic force only after joining the World Trade Organisation in 2001. China now runs a trade surplus with the United States (prompting China-bashing in the latter's Senate), has become the world's third-largest car market and can boast over a dozen companies on the Fortune 500 list."

The Tiger in Front: Survey: India and China. Economist.com. May 3, 2005.
"Home to nearly two-fifths of humanity, two neighbouring countries, India and China, are two of the world's fastest-growing economies. The world is taking notice. In December, a report by America's National Intelligence Council likened their emergence in the early 21st century to the rise of Germany in the 19th and America in the 20th, with 'impacts potentially as dramatic'."

China Business Information Center..Export.gov.
"China is a region of great opportunity for all types of companies - not just large multinationals. But doing business in China can still be challenging. This site will help open the China market for your company. Click here for more information on using the China BIC, or for a list of FAQs. "

FAQs about Doing Business in China. Export.gov: China Business Information Center.
List of Frequently Asked Questions U.S. businesses have about doing business in China.

China: Enter the Dragon. Special Report. Knowledge@Wharton.
"As China continues to make progress towards a market economy, businesses around the world are ramping up their efforts to tap into the country's huge marketplace of 1.3 billion consumers. Despite concerns over such issues as intellectual property protection, corruption, the banking system and overregulation, executives from a number of U.S. companies are pushing ahead to invest in the Chinese economy through alliances, joint ventures, the venture capital market and other initiatives. Last spring, Wharton held a China Business Forum in which participants from a range of companies offered their observations on doing business with the Chinese."

China Overview: globalEDGE | Country Insights.
"For centuries China stood as a leading civilization, outpacing the rest of the world in the arts and sciences. But in the 19th and early 20th centuries, China was beset by civil unrest, major famines, military defeats, and foreign occupation. After World War II, the Communists under MAO Zedong established a dictatorship that, while ensuring China's sovereignty, imposed strict controls over everyday life and cost the lives of tens of millions of people. After 1978, his successor DENG Xiaoping gradually introduced market-oriented reforms and decentralized economic decision-making. Output quadrupled by 2000. Political controls remain tight while economic controls continue to be relaxed."


Additional Sources:

Guanxi and Graft

"Opinion is divided over doing business ethically in China. One view holds that corruption is endemic on the Chinese Mainland and that business ethics there is an oxymoron...

"Nonetheless, the 1998 Corruption Index ratings (University of Gottingen and Transparency International, 1998), a poll of polls based on perceptions by international business people and expert commentators, lends only mild support to the claim that there is endemic corruption on the Chinese Mainland. China is ranked 52nd out of 85 countries in terms of the perceived integrity of its officials; i.e., according to seasoned opinion, it is not among the most corrupt environments in the world." [ Source: "Ethical Dilemmas of Relationship Building in China." Thunderbird International Business ReviewUF+ Icon Vol. 43(2) 171-200. March-April 2001. Cited in ABI/INFORMUF+ Icon]

Getting Small Businesses Export Ready

"With the rapid pace of economic globalization, small businesses in the United States can no longer afford to ignore the challenge of international commerce. The question a small business owner once asked was, 'Do I export my product, or not?' The question has now become, 'If I don't expand my operations internationally, will I survive?' The small business has three major incentives to consider internationalizing: (1) domestic markets are becoming saturated, and continued growth will require new markets; (2) foreign competitors are entering the American market and out-competing U.S. businesses; and (3) as production costs continue to escalate, U.S. companies can create a competitive advantage by securing heaper production facilities overseas." [Source: Thunderbird International Business ReviewUF+ Icon Vol. 43(2) 257-268. March-April 2001. Cited in ABI/INFORMUF+ Icon]

Country Commercial Guide: China

"China is rich in contradictions for U.S. firms. The world's most populous nation, China covers an area larger than the United States. Yet the China market is small and concentrated in a few areas along the eastern seaboard. China is one of the world's oldest civilizations, with thousands of years of history, literature and culture. Yet the People's Republic is a mere 50 years old and most of the laws and regulations governing business and trade have been written in the past twenty years. Courtesy toward guests is a virtue in Chinese culture, and Chinese people can be extraordinarily hospitable and kind. Yet everyday discourse in china is rude and confrontational and the China market is full of cheats and swindlers. China is a communist country; the first article of the Chinese constitution states that China is a socialist country under the leadership of the proletariat. Yet, over the past twenty years China has moved from a planned to market economy and is now in many ways more capitalist than communist." [Source: FY2001 Country Commercial Guide: China. U.S. Department of State. 123 p.]

Turley's Top Ten Tips on Doing Business in China

    • Do your due diligence - twice

    • Choose the right partners

    • Pay attention to "guanxi"

    • Don't be afraid of the short-term

    • Be flexible...

    • ...but don't be afraid to say "no"

    • China is not a single market

    • Get professional help...

    • ...and hire an interpreter

    • Be polite

[Source: Contact China: A Resource Guide for Doing Business in the People's Republic of China. U.S. & Foreign Commercial Service. American Embassy: Beijing. People's Republic of China.]

Chinese Family Businesses

HONG KONG -- "Chinese family-run businesses, which helped power a decade of breakneck growth in Asia, are at a crossroads as many struggle to hold on to staff, fend off foreign competition and exploit the potential of the Internet, according to a report from the Economist Intelligence Unit and Andersen Consulting.

"The problems illustrate how the trends of globalization and liberalization are shaking up Asia's most powerful business groups, just as many families hand leadership to a new generation.

"As they go into the third generation, [Chinese family businesses] have to think about how they can professionalize management and move from a family-based connections-type business to a rules-based organization," says Joseph Lobbato, a manging partner at Andersen Consulting and a contributor to the report."  [ Source: "Family Businesses in China Struggle with Globalization. By Peter Wonacott. 8/3/2000. The Wall Street Journal. In FactivaUF+ Icon.]

Return of the Natives

"Reversing decades of exodus, some of China's best and brightest are returning from overseas to take part in the Chinese gold rush. Reforms in China, coming at the same time the U.S. economy is stagnating, are convincing some successful Chinese executives that their hottest prospects are in their homeland. For them, China shimmers with the same promise Silicon Valley offered 10 years ago.

"The fact that China seems so attractive to entrepreneurs illustrates the nation's changing attitude toward business. People such as Mr. Luo are being wooed by Chinese government officials offering free plane tickets, hotel rooms and venture-capital funding. Five years ago, China didn't have local venture-capital firms. Today it has about 200, most of them backed by government agencies, accounting for about half of all such financing in the country. The Chinese government has set up more than 60 "returnee start-up parks" in recent years and says returnees have created almost 4,000 companies.

"Last fall, the Communist party enshrined in the Chinese constitution a new ideology, dubbed the "Three Represents." It holds that the Communists should represent the greatest number of people, advanced culture, and the most advanced forces of production, including private businesses. The party, it says, is no longer the vanguard only of the working class, but of all Chinese -- opening the way for tycoons to join the Communist party and be appointed to senior posts."

[Source: "After Years in U.S., Mr. Luo Seeks Fortune in China." By Jonathon Kaufman. The Wall Street Journal A1, C1 March 6 2003. In The Wall Street JournalUF+ Icon & FactivaUF+ Icon.]

Shanghai Sophistication

"Shanghai is China's commercial and retail capital, being the busiest shopping city in the whole country, attracting the most ambitious new retail developments, and drawing in over 200,000 shoppers per day into its main shopping street, Nanjing Road.

"Shanghai is surrounded by six of China's richest provinces, and its position as China's foremost commercial port, has long given it a reputation for being China's most cosmopolitan city.

"These factors have made Shanghai shoppers the most sophisticated in the country, with an eye for top quality and attractive presentation, and a strong awareness of contemporary fashion trends." [Source: "China's Main Commercial Centres.". GMID: Global Market Information DatabaseUF+ Icon. Euromonitor. Published: November 1997.]

China's Broadband Market

"We attended a China broadband conference in Beijing where China's major operators presented their strategies for the last mile. China has done very well in building its fixed-line infrastructure with 140mn fixed-lines at the end of 2000 or a penetration rate of 12%. Unlike most countries, the local fixed-line business has been a growth business, but the strategy is shifting. While there is plenty of room for fixed-line penetration to grow, there is a sense that in certain areas, saturation is beginning to settle in. The major cities and areas of wealth such as Shanghai, Beijing, and Guangzhou all have fixed-line penetration rates of 30-45%. In addition, with multiple operators building backbones and installing the latest dense wave division multiplexing (DWDM) technology, long-haul capacity has grown strongly in China. The operators expect that the next major area of competition, and potentially the most lucrative, will be to bring broadband to the last mile." [Source: "China Broadband: Next Wave of Competition: Strategies of the Market Players." By F. Cheun, et al. Merrill Lynch Capital Markets. March 5, 2001. In Investext]

Negotiating Strategies

"Chinese negotiating strategies and practices are extremely different from those of Europeans and Americans. As a result, many contracts give the Chinese partners unusual advantages. Knowledge of how the Chinese negotiating process works can reduce these inequalities, even though experienced global negotiators see Chinese negotiators as among the world's best and toughest." [ Source: Business Guide to Modern China.  By John P. Alston. East Lansing, Mich.: Michigan State University Press, 1997. In netLibraryUF+ Icon]

Chinese Business Behavior

"How can non-Chinese managers understand the often puzzling (to them) behavioral characteristics of Chinese businesspeople? [Ming-Jer] Chen believes they need to familiarize themselves at least in part with the social and cultural values of the ethnic Chinese. These values, he asserts, form the basis for Chinese business practices, even pervading day-to-day corporate decisions. 'The Chinese company is not just an economic entity. It’s a socio-economic combination. For instance, in the case of overseas Chinese, many businesses are family businesses. Families’ agendas and goals are involved, a situation that often leaves Westerners feeling frustrated and confused about what is going on. Even public companies frequently have their own social networks, which play an important role in the decision-making process. To complicate things even more, in the PRC the majority of companies are still state-owned, or even state-affiliated, so they have a different kind of decision-making and reporting process.'"[Source: "Breaking Through the Chinese Wall: Doing Business with the Chinese." In Knowledge@Wharton.]