Conducting Business in the Land of the Dragon: What Every Businessperson Needs to Know about China

Your company reps should be encouraged to spend time building professional relationships. This is part of doing business in China. Personal connections between company presidents are a useful fallback during any dispute to re-affirm common objectives and find practical workarounds. Chinese courts can be expensive time-wasters. Take a page from many Chinese companies and add an arbitration clause to your contracts.

The China International Economic and Trade Arbitration Commission provides advice to foreign companies on their website.

The key point is to create conditions ahead of time to resolve problems that might otherwise threaten your growing China business. And remember that personal connections bring opportunities. One executive recently noted: She arranged for me to meet the current vice mayor, who, as it turns out, is the neighbour of my marketing director. Our wood export members tend to only deal with major state-owned distributors and reputable private sector ones. Similarly, our focus regarding Chinese developers is to target the largest ones with proven track records.

Protection from EDC, where appropriate, is advised. Smaller cities often present faster economic growth rates and less competition, and they may be just a few years away from reaching the same level of disposable income as cities such as Beijing or Guangzhou. Deciding where to focus in China is critical. If you are going to China for an existing client, proximity to their operations makes the location decision a no-brainer.

If you are producing for export, consider smaller, newly upgraded port cities with lower costs than, say, Shanghai. High-tech and industrial parks abound. Be prepared to negotiate a price for every detail, from water to electricity rates and grid hook-ups. Negotiate options in advance for your future needs.

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Inland provinces such as Sichuan offer greater incentives than others places. Remember that Canadian companies on the ground can be good allies. They are often happy to bring you in because it helps them win favour and secure better deals with local governments. Transparency, rule of law, a fully convertible currency and sophisticated financial sector all still make this city a good launching pad for your China strategy.

Every firm should implement a strategy to protect their intellectual property rights in China, and that starts with registering IP: China has modern regulations, but enforcement is still lacking. The good news is that for most firms, a successful IP strategy is possible, and there are many examples. It almost always includes registration. Once you patent your technology in China, it is easier and cheaper to seek redress, sometimes without even turning to the courts.

Every strategy should also include practical, non-legal measures designed to avoid the courtroom altogether. For some, the strategy includes withholding core technology manufactured elsewhere, or physically separating manufacturing lines and employees. As Chinese companies battle one another over IP rights, domestic pressure for better enforcement is mounting. They simply frustrate and slow down business negotiations in China without the expected benefit. This is a tough sell in big western board rooms whose directors are held accountable for ensuring that prudence and wisdom are followed in all transactions.

The central government sets targets for everything from reductions in energy use per unit of GDP to the supply of hogs. These targets filter down from Beijing to the provinces, to city governments, counties and townships. State owed enterprises, which exist at national and sub-national levels, are often ordered to help meet such targets. But meeting national targets and supporting local development plans are an essential part of the game. It pays to understand these plans and the pressures under which state-run firms operate. It pays to develop good relations and to present the right solutions.

Lunch with a vice mayor and the chair of the local public utility may be exactly what you need. Once you are an established part of the local supply chain, business will flow. Your Chinese business partners often assume that the Canadian government plays a similar role. Your counterparts will feel much more like transacting if they know the Canadian government is on your side. Take full advantage of our considerable Canadian government presence and expertise in China. Keep them informed and visibly on your side. Complex distribution systems cut into margins and available shelf space.

However, there are signs that things are changing. Urbanization rates continue to expand the ranks of the middle class. New retail models are in development. Whether expanding a franchise or selling products, here are three things to think about: A Localize your offerings. Western goods appeal to the Chinese, but sell much better when they conform to local tastes.

Study those who have been successful. On your next trip to China, eat at a KFC. B The Canada brand is positive, especially for Canadian-made health food products, which sell at a premium. These are items that should not be re-packaged or else risk losing their competitive edge over local food products.

C Remember that most Chinese consumers spend time to save money and not the other way around. If you have to re-engineer your product, do so from the bottom up rather than removing features from the top down. If you need to re-invest in your company, China is a great place for partners. Volatility in Chinese stock markets, government measures to curb real estate speculation and an underdeveloped financial market have encouraged some to look abroad.

Many Chinese already have personal connections with Canada through resident family members or dependents studying at Canadian schools. They are interested and ready to diversify. The key is to present a concrete project proposal. The most popular investments in Canada continue to be mines, sawmills, commercial real estate and tourism developments.

So how do you find your Mr. Capitalism in North America is relatively genteel now, governed by many more rules than when journalist Ida Tarbell exposed the workings of the Rockefeller empire and the oil industry, he said. Lee, a former Vancouver city councillor who is from Taiwan. And the new immigrants from mainland China have not always made an effort to connect. Chan said he has tried to organize business socials, but the mainlanders, not used to that kind of interaction, won't show up.

For decades, older Chinese arrivals have scorned newer ones. Chinese Canadian students at city schools routinely shunned those who were FOB — "fresh off the boat. When he went to university in the s, the Canadian-born Chinese did not want to let the new Hong Kong people into their student group, so the Hong Kong kids started a new one. And now, with the mainland Chinese, a repeat of that resentment and disdain is playing out. V ancouver's recent Chinese immigrants know all about the scorn for spoiled rich kids and the suspicions about corruption.

Most of the Chinese children here are more like her son, said Ms. Her oldest is at Simon Fraser University, getting straight As in marketing. None of those interviewed has any more insight into Vancouver's real-estate scene than anyone else. The Chinese make it more visible," Mr.

And they're more forgiving about the issues that rile locals. Houses being torn down? And they were as divided as others over B. Sherry Qin said B.

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Anita He said it will send a message to all Chinese: Chinese cities, which control who can be defined as a legal resident, are imposing their own restrictions. Shanghai has strict rules. Liu, who immigrated to Canada in through the skilled-worker stream, not as an investor, even though he owned a chain of Best Buy-like stores in China.

The proportion of immigrant-investors to Canada never exceeded more than 4. About 8, immigrant investors came from mainland China to B. In the same period, B.

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She said she pays Canadian tax on her investments here and in China. My kids are here, they're safe, they're happy," said Ms. He, who immigrated two years ago because she felt like the situation in China — the pollution, the environment, the politics — was getting worse. But her ex-husband continues to run his business — a printing and forestry company in Yunan province — and pay taxes in China, sending her support money. He, now 48, focuses on raising her children here, using her time when they are in classes at the local public school to take lessons in singing and in playing the qing, a classical Chinese stringed instrument.

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Her house looks standard Canadian, the front hall filled with children's shoes and clothing, and walls covered with family pictures and Ms. The issue of how to get the money they made in China to Canada is challenging. He said some of the money she gets is funnelled through Hong Kong. She got residency status there so she could have more than one child, which usually would result in a penalty or a state of non-official existence for her additional children.

A bout half of the dozen people interviewed came to Canada as skilled workers rather than investor-immigrants. Lao Wu was among those who have gone between the two countries to get their slice out of the booming economy in China after getting citizenship. He was accepted as a skilled-worker immigrant in He and his wife were living in London, where he was studying econometrics, and moved to Vancouver for the great seafood.

But he worked for a decade in Beijing, importing bomb-protection suits. He became well-off enough to buy a farm in Maple Ridge in addition to his house in Coquitlam. He wants to start a business that would be like a Chinese version of ancestry. And he hopes to raise animals and flowers and perhaps run a small RV park at his farm in Maple Ridge. Alan Yu, a slight man who welcomed The Globe to his modern apartment in one of the new developments at UBC, was the East Asia sales manager for companies like Dupont and 3M in Shanghai, and ran a manufacturing company.



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They immigrated to Vancouver in , after qualifying under the skilled-worker category. During that time, Mr. That is something immigrants here long for. Yu said a Chinese man, driving a Ferrari, once asked him for one of the minimum-wage jobs at the West Van branch of Kin's just to have something to do besides hang around the house. Yu complied, but the Ferrari driver lasted only a few weeks.

In , the family moved back to Shanghai.

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Like many of those interviewed, Mr. Yu said people feel an obligation to keep their companies going for the sake of the employees. You have the responsibility," Mr. But last year, he and his wife decided it was important for the children to get a better education. They had bought a house in Marpole in , which is now rented out. He bought an apartment at UBC in a building that is about per-cent owned by people with Chinese names to ensure that his girls could go to Maple Grove Elementary School in Kerrisdale.

He has given up his career to take care of them. Yu, who has abandoned suits for a more casual look these days: The rest of the time, he is taking the girls to piano, swimming, skating and swimming lessons, as well as extra tutoring in English. The people interviewed by The Globe are grateful for their chance to live in Canada. They also know people who have moved back to China, unable to find work in Canada with comparable prestige and money. I t is hard for the new Vancouverites when life in the slow lane turns sour. Sherry Qin felt like she had adjusted fairly well since she moved here in It is hard to be here on her own, while her husband, an architect, works in China.

But she had grown to love the city and felt like she got along well with her neighbours. Her rapidly improving language skills and the dog helped her make connections with her English-speaking neighbours, some of whom regularly go along on her walks. So she was shocked when she went to a local park recently with her dog and an acquaintance from the neighbourhood asked her angrily: Others talked hesitantly about similar incidents: Someone recently yelled on the street to Bing Thom, one of Vancouver's most prominent architects, that he should go back where he came from.

Woo's organization, funded by the federal government, is aimed at bringing head offices here. He has worked with six entrepreneurs who have started businesses here or moved operations from China to Vancouver.



Woo, a third-generation Canadian who grew up in Singapore. We are in a dangerous time. This is a space where subscribers can engage with each other and Globe staff.