USA companies have failed in China, because they underestimated the differences in doing business in China versus the USA, and they lacked a long-term commitment to be successful in China.

China Business Environment – Protection of intellectual property can be challenging in China, along with maintaining USA standards for business conduct. Business law and Chinese regulatory rules may be less clear than in the USA. The role of labor unions and works councils can be quite different than most USA managers might expect, and requires understanding of Chinese cultural norms.

China Government Influence – While China has made tremendous progress encouraging development of a market-oriented economy, there are still important business decisions that must be made through collaboration with local governmental agencies. China participation in the WTO has improved the ability of USA companies to operate in China, but this trend is an evolutionary process which will take time to be fully effective.

Due Diligence in China – USA businesses that fail to meet their goals in China often do not fully consider whether their strategies and core competencies provide a basis for success in China. They may not fully evaluate external factors in China, such as competition, supply chain logistics, local technical and business expertise, which may be critical to successful marketing or operations plan in China.

Alignment of Strategic and Operational Plans – The complexity of doing business in China requires a long-term strategy for success in China. However, while a long-term roadmap is desirable, a step-by-step approach to entering China can minimize risks and maximize benefits of doing business in China. Alignment of realistic implementation plans with long-term strategies that take into account the Chinese market environment will reduce mistakes and frustration. The significant benefits of Chinese marketing and operations activity must be balanced against calculated risks of doing business in China. Local business partners can assist in investigating both the benefits and risk to your company. Exploratory business tours to China can provide valuable insight into Chinese market opportunities, and facilitate meeting high level contacts that can be the beginning of building relationships with key partners to ensure your success in China. Establishing “Guanxi” relationships with the right people in China will help ensure a successful venture for your business.