Doing Business in China
China, the world’s most populous country, is one of the world’s strongest economies. China’s success is nothing short of breathtaking.
In 1971, when President Richard Nixon visited China. the country was a backward economy awakening to the dynamics of the outside world. Vast constraints were thrown off while the Country still insisting it was a Communist country, Indeed today it is still a country ruled by the Communist party and 98% of the financial institutions are government-owned.
China is the world’s 2nd largest economy after the United States. China is the world’s leading exporter and the second-largest importer in the world. For example China has replaced the United States as Brazil’s major trading partner.
China is awash in cash and and is using its resources to invest in its infrastructure and in industries in countries worldwide. In the area of infrastructure, China has developed its major seaports such as Shanghai, Shenzen, and Hong Kong (which is considered an autonomous region due to the agreement with Britain in 1997 that it would maintain Hong Kong as a separate entity for 50 years). China has also developed a rail network uniting the vast country, with an emphasis on High-Speed Rail
A few years ago I gave a speech in Los Angeles that was titled “Be Wary of Doing Business in China” and some of the major points were:
–China does not respect U.S. contract laws.
– China places emphasis on “mutual trust” and long term professional relationships. To do business in
China one must retain a firm such as Atkins International that has contacts with Chinese firms.
– A typical “escape” clause that the Chinese use is the fact a contract will be valid only if a Chinese firm can visit the U.S. to visit a factory that it is considering doing business with. In reality only the U.S. Secretary of State can assure a Chinese firm of a Visa thus signing a contract with a Chinese firm assuring them they can visit the U.S. factory for example is a classic loophole they can exercise to get out of an agreement.
– All contracts must be noted on each page with a signature not only initials.
– Intellectual property rights are not honored in China and causes a problem in doing business in China.
China values long term professional relationships. The Chinese are not going to be susceptible to a one-shot sales approach. Meetings are conducted in a formal manner in formal business attire. A Chinese contact will be impressed if a guest knows something of Chinese history and geography, and attempts to speak a few phrases in Mandarin or Cantonese.
China exports $1 billion worth of goods every day to the United States.
For more information on this article contact David Atkins at [email protected]