We’ve spent the last few weeks discussing our experiences with first operating a direct sales office and then a manufacturing facility in China. There are several key points that we learned from this experience. While China is a rapidly developing country (more cars were sold in China in 2008 than in the U.S.), it is still a place where the laws protecting your business can be pretty lax and where U.S. expatriates can feel pretty lonely.

Business-to-business selling makes operations in China somewhat easier. Your customers will most likely be trained engineers eager for the latest technology. Selling in China, even more so than in the U.S., is based very much on relationships. Once these relationships are developed, sales are quick to materialize. The key is having that local partner who knows how to maintain those relationships without bribery. “Gift giving” is a way of life in the business world. In the U.S. it can be considered bribery and is illegal. So you must be very explicit in the instruction to your sales people over what is and is not permitted by your company.

As with our Taiwan agent, you can’t rely on an existing partner from another market – even one as close as China and Taiwan – for the required skills. Identify a local with an entrepreneurial personality and basic business skills and try to build a long-term relationship. Make that person an integral part of your planning. Also, identify a local attorney and a local accountant with whom you can work.

Rely on your own insights and learn from your partner in the market. This also means that you need to protect your product from copying theft. The attempt to copy our product failed because the copier didn’t know the critical elements that spelled the difference between success and failure. His copies didn’t work.

Be willing to experiment with new ideas that may be different than your own experience indicates. However, don’t tolerate sloppy work and shortcuts that you know will not work in the long run. Build on solid fundamentals in setting up the business. Watch out for pirated software, which is rampant.
  • Have a solid business plan that provides a realistic model for sales and expenses.
  • Strive to build loyalty and trust for a long-term partnership.
  • Protect your designs from theft. Keep close control over the key elements of your designs.
This example over the last few weeks, I hope, has given you some insight into setting up an operation in a developing country as part of your business planning for next year. Next week we will cover some of the other things your business plan should include.