Becoming A China Specialist :: Data Sheet
05-05-2015, 11:50 PM
I wanted to address something here, since it's come up off-forum a couple times now with members.
There's a perception both inside and outside of China that to do business in China requires a magic bullet called "connections" and "relationships." It's incredibly common to try to add a mystical quality to what this entails by using the Chinese word for relationships (guanxi) when talking about it.
It isn't true that who you know doesn't matter in China. Like anywhere, it can certainly come in handy, depending on what you are trying to do. However, it's importance, relative to literally everything else is significantly overstated.
Anywhere in the world, people are ruled by desires. Since money will buy most things people want, there tends to be those with money (who form a special in-group that has no interest in sharing their success) and an outside group (pretty much everyone in the world) who simply subsists, whether that be at a middle-class level, a low class level or a survival level.
It's not uncommon for people to think that when coming to China, "having guanxi" is the important thing to focus on. This is untrue.
It's not even true that speaking Chinese is important. Speaking Chinese is handy and will significantly better your standard of living. It will usually go hand-in-hand with developing a real knowledge of the country. But hardly mandatory. You can hire good people to speak Chinese for you.
The real factors that matter is having MONEY and/or A ROCK SOLID BUSINESS PLAN/COMPETITIVE IDEA.
If you come to China thinking that you need to build connections and relationships for the future, you are mistaken. Until you have a business plan, you don't know what connections and relationships you will need, if any.
It's good practice to learn how to meet people, but that game really doesn't begin until you have a plan. It's then that you can start to evaluate who you need to know and how to motivate them to give you what you want.
Having relationships in China is not going to help you even a little (even its the right relationships with the right people) if you can't promise them something they can't get easier another way.
I've been approached by several people (who claimed to have money) who wanted to go into business with me and start a school. In this situation, it's easy to think "great, I have a business partner now."
Do you really think that my new "partner" is thinking this? Forget it.
Giving me a 50% share in the business for it's entire future is the last thing he plans to do. He is only talking to me because I have something he wants (a white face and high level teaching skills to promote HIS new school with). I'm not talking to him because of my "networking skills," because he thinks I've got great ideas or because he views me as his equal. I'm just a pawn.
The moment I can be replaced for great financial gains on his side, I will be, possibly before I earn a single yuan.
You need to start with a business plan that can't easy be copied by someone who is willing to work for less money.
Then you need to have the cash to put your plan into motion.
If you have a business plan, but no cash, you're dependent on people with cash and they hold all the cards then,
If you have no business plan, but cash, people will come to you, but only as long as you still have money for them to put in their pockets. Why would they come through on their promises, once you have nothing left to offer?
If you have a business plan that other people simply can't replicate (due to special skills or knowledge possessed only by you and people who are too busy to use steal your ideas) and you have cash, suddenly you hold all the cards.
You won't get much traction in China if your plan doesn't offer enrichment to other people.
A lot of the complaints about needing guanxi are because of roadblocks that occur because officials and others aren't motivated to make things easy, because there is nothing in it for them.
Other complaints are from people who haven't proven that they are serious yet. I've read numerous autobiographies from successful investors who just showed up with money and were only getting vague answers from government officials until they made one small investment and then suddenly all the doors opened.
If you have money and a desirable business plan, you WILL BECOME THE CONNECTION that others want guanxi with.
You won't need to spend several years learning about China and "networking" because they'll be a line around the block of people far more desperate than you, because they all want a piece of the action and they can't get it with out you.
The only difference between China and civilized countries like Canada and the USA is the ease of entry into the market place. China is highly regulated and this gives the powerful (READ: people with money) extra tools to keep the poor people outside their power structure of opportunity.
But if you have value to offer (besides a white face), that power structure will be yours.
Do you want to produce products in China and ship them abroad? Easy. You don't need guanxi, factories will happily welcome complete strangers and make sure that your products have no trouble leaving the country. In fact, if you trust them, they'll literally ship them for you themselves.
Want to import products to China and sell them in stores? Assuming that your products are highly desirable in China and you're the only access point, the retail store ownership will make sure you have smooth sailing with the importation, because the sooner the products are on shelves, the sooner they make money. Empty shelves will cost them money and they aren't going to let that happen.
Want to import a product, sell it in your own stores and then take whatever profit for yourself and leave the country with it? Heh. Just watch the roadblocks go up and leave China in disgrace two years later, bitching about how "guanxi is really important in China."
The concept of "guanxi" is highly overstated because of the number of underachievers who have come to China with big dreams, but lack anything of value to offer.
I've had to listen to countless people talk about guanxi, but I've never met a single person who has offered a concrete example of how guanxi actually helped anyone succeed. There are certainly examples out there, but even those would come down to someone having bribed their way to the top of a bidding wore for a lucrative monopoly on doing a certain type of business.
Success in China will come because you are in an unbeatable position to negotiate, not because you met the right people and they helped you out simply out of the goodness of their hearts when you needed it.
Examples:
After teaching in China for three years, you get tired of stupid English language curriculum and low quality schools.
(-A-) You try to start your own school, but the legal regulations require you to rent a very large retail space first and you can't afford this. You go home and find work at a Dairy Queen.
(-B-) You create a curriculum from scratch and find a Chinese partner who operates six private language schools and share your curriculum with him for a share in the business and a small salary. Your curriculum is soon copied and stolen by every school in the neighbour and your business limps by. You get your small salary (because your partner doesn't even try to push you out of the business, because you're still the best white face he has), but the business fails to generate a profit and you have to teach classes yourself, just to pay the rent.
(-C-) You create a curriculum from scratch and offer online access for a fee. It takes two years, during which you make good money, but eventually all your clients steal your IP and stop paying you. You sue them and earn a small settlement worth a year's income, but slightly modified versions of your curriculum is created and no one want to pay for use of yours. You go home and get a job at a Dairy Queen, where you speak excellent Chinese to your customers during tourist season. You earn the same hourly wage as the non-Chinese speaking employees.
(-D-) You create a curriculum from scratch and give it away for free on a website. You use the website to attract students who are looking to study the free curriculum in a school somewhere, because you can only learn so much just from the website without actual classroom practice to go with it. You sell the contact information to schools throughout China for a cut of their profits on teaching the students with your curriculum. You also require them to accept licensing from you and only license high quality schools that deliver quality.
People learn to trust your website, because you only refer students to reliable schools with proven results and the schools, which always want more students, are motivated to keep paying your fees, because if they rip you off, they'll be back to finding students all on their own. In the end, they will make more money now and in the future with you than without you.
Some asshole gets pissed after you unlicensed his school because he lies to parents. He complains to someone he has guanxi with about you operating your website without a legal business presence in China. He tries to get you blocked by the Great Fire Wall of China, but your happy clients who appreciate getting new student from you every month bribe the government official to ensure that your website is never blocked.
What story do you want to tell some day?
I'm the King of Beijing!
![[Image: laugh3.gif]](https://rooshvforum.network/images/smilies/new/laugh3.gif)
