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32 Country starter pack Getting started in China Using interpreters The official language of China is Mandarin (otherwise known as pǔ tōng huà - 普通话 ). But for many Chinese, their native tongue is their local dialect. English language skills are encouraged, particularly in major cities where many business people – particularly younger – have studied it in high school or at college level. But English is not widely spoken among the general population in smaller cities and rural areas. It can be useful to have an interpreter during business visits, particularly when you need to discuss technical aspects of your operation. In practice, many Australian businesses hire bilingual Chinese staff to attend meetings and negotiations, assist with interpretation and understand context. There are also increasing numbers of Australian business people who speak Mandarin. It is strongly recommended that you make an effort to at least learn basic phrases to assist in building relationships and rapport with Chinese people, as well as establish before going into a meeting if an interpreter will be required. If you decide to hire an interpreter, you should make sure that: • The interpreter is professionally trained and experienced • You have trust and confidence in the interpreter’s communication and presentation • The interpreter has an effective technical understanding of your business and approach. They should be fully briefed before meetings and, when necessary, provided with a list of terminology well in advance. Translators: Interpreting and translating are two different professions with totally different skills. Interpreters are for oral interpreting and translators are for written translation. Although many people have both skills, some of them specialise in one discipline. Decide which one you want. Finding an interpreter or translator: The best way to find the right translator or interpreter is to rely on the recommendation of someone you trust who has used them before. It’s not advisable to hire an interpreter or translator straight off the internet or a trade directory unless they have reputable third party endorsements. What it costs: The cost of hiring an interpreter may vary depending on the nature of the meeting (informal, such as a factory visit, or more formal), the duration of the meeting and where it is (e.g. Beijing or Shanghai). Interpreters charge for a minimum of half a day, even if it involves just an hour’s work. The cost of an interpreter for a meeting in Beijing or Shanghai can vary between $700 and $1,200 per day.
Country starter pack Getting started in China 33 Financing your Chinese business venture Understanding the additional costs associated with conducting business overseas is essential to making an informed decision on whether you are ready to take the plunge. The main differences in China compared with operating in Australia may include: • A longer cash flow cycle, which could increase the pressure on cash flow and working capital • Being further away from clients, this can increase the risk of non-payment and make it more difficult to collect debts • Risk of non-payment in China is generally higher than other countries in Asia, even if you have a presence there • Getting paid in other currencies, which can expose you to foreign exchange risk and affect profit margins • Greater difficulty accessing finance, as Australian banks are often reluctant to accept overseas assets as security for loans • A longer timeframe to recover the upfront costs of establishing operations, which can reduce the cash flow and working capital available for domestic operations. Adequate funding will be critical to your success, and a detailed financial plan is crucial. Your financing options could vary according to whether you are exporting, importing or investing. A wide range of funding options exists, with various grants, venture capital and equity sharing deals increasingly commonplace. However, banks remain the easiest and most approachable source of funding, with most of them offering tailored services. Your existing bank manager may be your best first port of call. Venture capital could be an attractive alternative financing vehicle if you are comfortable with a third party taking an equity stake – and a share of the profits – in your business. As a first step to research the venture capital market, go to the Australian Private Equity and Venture Capital Association Limited website at www.avcal.com.au. Government assistance – both federal and state – is available to Australian businesses wanting to expand overseas, especially exporters, through a number of grants, loan facilities and reimbursement schemes. These include Export Finance Insurance Corporation (Efic) – the Australian government’s export credit agency (go to www.efic.gov.au) and the Export Market Development Grants (EMDG) scheme, administered by Austrade. Full information can be found at www.austrade.gov.au/EMDG. Individual state and territory government websites also contain information on what financial assistance they can offer. Other sources of finance you could consider early on include: • A joint venture arrangement with a trusted partner in China • Receiving an equity investment from a sophisticated individual investor or ‘angel investor’. Is China a viable option? Have a detailed financial plan that considers: • Regular visits to the market and possible provision of samples • Hiring dedicated staff in China to assist with start-up • Business advisory services and legal consultants • Updates and adjustments as you collect more data and knowledge • Contains scenario planning and risk mitigation approaches. Risks Your research into any overseas market should include careful assessment of the risks associated with doing business there. While Asia presents Australian businesses with numerous opportunities for growth, going offshore entails increased risks that need to be identified, managed and reduced as far as possible. Due diligence also has to be actively practised, with particular care taken to protect intellectual property (IP) when doing business in China. China can be a challenging destination for Australian businesses, and in some respect can be more difficult than other Asian countries. Before entering the market, you need to understand China’s distinctive banking, taxation and legal systems. To mitigate such risks, Australian businesses should get professional advice where appropriate and thoroughly investigate the issues in entering the market and establishing business relationships. There are many people and organisations you can turn to for help. Choosing the right partners and the right professional advisers is a major step in mitigating risk. Your bankers, lawyers, insurers and accountants should also be able to give you knowledgeable advice about the risks you may face. The information provided here is simply an overview of the complex business
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Country starter pack Visiting China
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Country starter pack Engage with us
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Country starter pack Engage with us
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China

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