For many entrepreneurs, China looks like a new world of opportunity. But, like any new world, it is strewn with pitfalls and difficulties. For those who only look to the Celestial Empire, we have collected the advice of orientalists and businessmen who have been doing successful business with Chinese partners for a long time.
Is it necessary to know the language to link your business to this country?
- Chinese versions of corporate and ministry websites, as a rule, are more quickly filled with relevant content than Russian ones. In addition, knowing the language makes it possible to obtain reliable data (for example, the results of marketing studies) directly from the source, explains Roman Vilner, responsible for business development projects in China at RZD Logistics.
Certainly, to learn Chinese with its thousands of hieroglyphs, its unusual phonetics and its melody that changes the meaning of the statement, you have to spend more than a year.
Many Russians fall into the trap of Chinese hospitality and think they have befriended their partners. But it’s part of the corporate culture.
- During 15 years of working with Chinese buyers, I personally did not need their language. There were enough English. To interact with foreign partners, the Chinese in most cases open import-export companies, staffed by English-speaking executives. And with online personal communication, the WeChat messenger, common in China, allows you to translate correspondence with a click. Another thing is that if your product is to be presented in the market and convince buyers of its merits, a translator will come in handy, says shopkeeper Elena Dyakina.
Find a supplier
How not to make a mistake when choosing a reliable partner in a country with 1.4 billion inhabitants? Kirov businessman Pavel Kosachev advises the following algorithm: on the Alibaba website, in the “suppliers” section, you find the specifics you need. You look at the assortment, the volumes of production, the year of foundation, the number of employees of the company. A large workforce, assures the entrepreneur, is an indicator of reliability: more than 11,000 people work at the last of the factories where Pavel himself placed an order.
Alena Panasco, foreign economic activity expert at digital bank Tochka, mentions other resources besides Alibaba: 1688.com, Made-in-China.com, Global Sources. But each has nuances.
- There are many intermediaries on Alibaba, and it is important to verify their integrity. 1688.com is aimed at the domestic market, so prices may be better there, but communication is also more difficult, as suppliers often only speak Chinese, she says.
An effective way to find partners at industry shows has fallen out of favor due to the pandemic, but is expected to return soon. Another option is to seek the help of companies that specialize in selecting suppliers.
- Some of them can even provide such a service for free, usually on the condition that you also transfer the work of organizing the delivery to them, – notes Alena Panasco.
Not only the words, but also the actions of the partners of the Middle Empire may require, if not translation, at least clarification.
– The Chinese perceive time in a completely different way – not as a line, but as a spiral. Procrastination or delays in negotiations are not perceived by them as a loss of competitive opportunities: they can always be made up for in the next round. At the same time, the Chinese are very punctual, but for them this is a sign of respect for a partner, and not a desire to save time. During negotiations, as a rule, secondary issues are considered first, and only then the main ones, – says Nina Kozlovtseva, associate professor at the Faculty of International Economic Relations of the Financial University of the Government of the Russian Federation.
Experts competing with each other advise to stock up on gifts and not to forget about the importance of personal relationships in Chinese business. But there are also pitfalls here.
- When you arrive in China, you are warmly welcomed, you receive gifts, in the evening they usually take you to a restaurant and try to give you alcohol to drink. Many Russian entrepreneurs fall into the trap of Chinese hospitality and think they have befriended their partners. But these are just elements of corporate culture – the Chinese call them “sentiment investing”. If they succeed, then the “investment object”, perceiving the “investor” as a friend, will make concessions to him, – warns Svetlana Batanova, lecturer at the Financial University of the Government of the Russian Federation .
Treaty and intention
- A lantern that does not shine seems like a joke, but it may turn out to be reality. My colleagues were in the same situation. At the indignant cries of the buyer, the director of the Chinese company shrugged: “You did not say that it should shine,” says Maria Mishanina from the St. Petersburg Production Cooperative “Tselina”. – When signing an agreement with a Chinese company, keep in mind that it is perceived by the partner only as an intention. What to do? I advise you to write in detail in simple language about the main features of the product. Repeat with a 12 year old: he gets it – your foreign partner will get it too. Be sure to request samples, especially if you are buying from this supplier for the first time, and inspect your order before shipping.
- One of the pitfalls of doing business with China for my company at the initial stage was the apparent softness and flexibility of Chinese partners, – explains Ekaterina Borozdina, founder of the cosmetics brand TaiYan. – When I arrived at the factory in Guangzhou, I asked, “How much does this cream cost?” – “10 yuan”. – “And if we order 10,000 pieces, what will be the discount?” – “We can reduce the price to 9 yuan.” – “Is it possible until seven o’clock?” The factory representative hesitated a bit, looked away, and said quietly, “Well, you can do up to 7 yuan.” At this time, excitement stirred in me, and I was ready to “squeeze” the Chinese sweet almost to one yuan per pot. It’s good that I went to negotiations with a professional translator who knew the Chinese mentality. He asked: “How will the product change if the price is not 9 yuan, but 7?” To which the Chinese, delighted with the match of his opponent, replied: “We will not pack each cream in an individual box, we will make the jar not in glass, but in plastic, and the cream itself will be finer.” So I learned my lesson: the Chinese will never comply with your conditions. By haggling mindlessly, you won’t get the product you expected.
The same thing, assure many experts, concerns the reduction of production time: under the pressure of the counterparty, the goods will be produced quickly, but… at the expense of quality.
- Write a contract in Chinese, guided by the principle “what they said, then they prescribed it”: enter as many clauses as necessary, and make sure that the partner has seen and understood them exactly. If one side does not write the terms and the other does not even try to understand them, the chances of encountering problems are prohibitive. If you’re wrong, the Chinese will just say “it happened the way it happened”, and you’ll either have to give up everything or go to a Chinese court to try to defend your “overseas” truth. sea”, – Sergey Napreikin, who has lived in this country for 12 years, shares his experience.
- A license is the main document required to open a business in China. However, ambiguity is widespread in local legislation: the list of required papers says “and so on…” – and local elected officials have the right to demand any document in addition. In this case, you should follow their instructions, because in China it is not customary to establish direct contact with officials, the reason for this is strict criminal law, warns lawyer Pavel Kugach.
Aleksey Ufimtsev, director of the Yekaterinburg agency SiteActive, notes that Western companies must have a representative office in this country with a physical address, a local landline telephone and a native speaker of the official state language.
“Chinese employees must have public insurance, they receive targeted contributions, unemployment benefits, etc.,” adds Nikolai Beschastnov of the Moscow company Logrus IT.
To exceed the limits
– In order to distribute products on the territory of the Russian Federation, it is necessary to certify the goods in accordance with all requirements of the EAEU. Otherwise, you can face serious penalties in the form of fines of up to a million rubles and confiscation of the entire supply. A correctly selected TN VED code for products will reduce customs duties. For example, children’s clothes are subject to 10% VAT, and 20% for adults, explains Ekaterina Kurbatova, head of the Rostest Ural certification center.
The Chinese market, which emerged in the 1990s, has become one of the biggest shopping centers in Yekaterinburg. Photo: Tatiana Andreeva / RG
Pavel Popov, director of the transport company OKOMA Logistics, recalls the differences in customs legislation in our countries and calls for vigilance: “The goods must fully comply with the description according to the documents. Any discrepancy may result in cargo arrest, fine Any gifts that are not declared, while for China it is quite normal practice, the supplier may not even inform the customer that he has put some kind of cargo as a gift.
Not only in business, but even in the Chinese Internet is not easy to access.
p class=””>- Over the past decades, China has created a closed digital ecosystem to the world. The services we are used to are blocked in it, their place has been taken by analogues: Baidu, YouKu, Baike, Weibo. All contact with China starts with WeChat – it’s not just a messenger, they make payments, sell goods and even get married. Weibo is an analogue of Twitter, Baike is the Chinese Wikipedia, – explains Andrey Ermoshkin, commercial director of the digital agency Interium. – In order for foreigners to register a business account in China, they must upload all the documents and be patient: the information is verified by phone and not always in high quality English. The process takes one to two months or more.
Experts also told us about the rules for selecting gifts for business partners, logistics routes, the peculiarities of Chinese advertising and thousands of other intricacies – it is simply impossible to describe everything in a newspaper article. Here is the main advice – it was given by Svetlana Batanova: “Act boldly, but carefully. Hire Russian sinologists, because there are a lot of them now. Read books about the culture and economy of China. And may the Chinese god of wealth Caishen help you!”
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