THERE ARE FANTASTIC opportunities in China and, since many years, the gold rush is well under way. At the time, many Chinese crossed the Atlantic. Now western companies are digging for gold in China.
– You have to be careful when establishing contacts. You can check a lot of things. Hire a person to check the company you work with. Some companies have illicit assets, some companies have acquired assets illegally. You have to be more alert than in Sweden, says Johan Björkstén, Managing Director at the PR Company Eastwei.
A general rule is to let certain things take time. Take time to fi nd the right partner. Check what the company can do for you and what they have done before. It may prove to be totally different from what they promised at the meeting. Take time to find the right staff. Three months of probationary employment is the general rule in China and don’t be afraid to fi re people. Don’t employ people you “run into”. Run a proper employment process. Don’t wait too long for returns.
– Don’t accept “this is China, things take time”, as people say.
“There are a lot of people promising all sorts of things but very few stick to their promises”, says Johan Björkstén, vice chairman at the Swedish Chamber of Commerce in Beijing.
TORBJÖRN YNGWE BÄCK, manager at the Swedish Trade Council in Beijing, says that the key is preparation and commitment.
– People who fail here are the ones who didn’t do their homework. Some people believe they can do the same as in other countries. Others blame the cultural differences when things go wrong. Many problems can be avoided, he says.
Essentially, there are a number of traps, but that is no reason to avoid China, says Torbjörn
Yngwe Bäck. China is a market requiring preparation and good management; reality is not as straight forward as it seems.
– You can manufacture a product for SEK 1000 in China compared to SEK 3000 in Europe and you can sell it for SEK 10 000. You must be able to control delivery and quality, he says.
There are companies who received goods from China and could only sell ten percent. It is a very long and risky process to get a refund even if the contract stipulates your right to do so.
However, it is possible if you do it right.
Torbjörn Yngwe Bäck stresses the importance of a serious commitment. If you don’t have the resources, be careful. Board as well as management needs to be committed and allocate time. It is hard to expand in China “on the side”.
ONE MAJOR ISSUE is the personnel. A 30 percent employee turnover in some areas of China is alarming as well as the lack of skilled personnel.
– There are many talented engineers but very few innovators. There are skilled administrators but few managers. It is hard to find good communicators. This is all because of the educational system, says Johan Björkstén.
He says it is vital to find the right people in China. Companies who run into difficulties are the ones who chose the wrong co-workers.
– There are Swedish companies who hired people that cheated, embezzled and started their own business on the side.
Johan Björkstén recommends employing people with a documented experience. You could run into Chinese with an MBA degree who speaks very good English but with no experience at all. Check the veracity of the CV.
CHINA ALSO OFFERS unusual challenges. You have to protect your patents and copyrights. Avoid sophisticated business bluffs. Something totally unreasonable in Sweden is equally unreasonable in China. Make sure to have Swedish representatives in place or you’ll risk loosing core values in your business.
Arvid Norin