China

Country starter pack
Conducting business in China
83
CASE STUDY
North Head
John Russell, Director
Persistence, adaptability and a sound business plan
are vital for newcomers hoping to break into China’s
unfamiliar business environment, according to
Australian communications specialist John Russell.
“Most Australians are great travellers, they seem to
have the ability to adapt,” says Russell, managing
director of strategic communications and public
affairs company North Head. “In China they will
deal with distinct cultural differences, business
processes and ways of operating but if there’s
persistence there are good prospects for success.”
Chief among those cultural differences is the
practice of “guanxi”, or building relationships.
“The Chinese business model tends to be less
contractual and more based on trust and the guanxi
so there can be a sense of frustration. It’s slower
to build relationships, but having said that, once
trust has been established the Chinese partners and
entities normally want to move very quickly,” says
Russell. “An understanding of those relationships
is necessary for success, but increasingly with
economic reform and changes in China guanxi is no
longer sufficient for success.”
That change is a constant factor throughout the
business world.
“There’s no such thing as the status quo in China,”
says Russell. “It’s the land of opportunity because
of its growth, the size, the dynamism. What you see
now was not really there five or 10 years ago and
you get the sense the market will look very different
in the coming five to 10 years. That can be very
disconcerting to many business people, but there
are enormous opportunities in the opening up of
segments and new markets very quickly.
“You have to fit in with the broad objectives of what
the government is trying to do and if you work to
the rhythm of the economy and its development
here, whether it’s green tech or the growth of
healthcare and education services, if you’re
fitting into the priorities of the government and
economy you’re running with the tide and have
more opportunities. If you’re trying to do it without
understanding what’s happening with the broad
market direction you can be caught out badly. This
is not a market for carpet baggers.”
Due diligence and a sound business plan set genuine
players apart from those chasing a quick buck, says
Russell.
“It comes back to the need to do due diligence.
Many times I’ve seen people come here who will
spend more on hotels and airfares than they will
on doing proper due diligence, taking the time to
understand the partners and market dynamics.
There are many differences of the east from the
west, the north from the south; and drilling down to
various provinces and city markets.
“What is required is what I call not an interest in the
Chinese market but a commitment to the Chinese
market. You hear lots of bad stories of people doing
short trips up here, they meet someone who seems
OK, get into a business relationship that then
falters and turns into a bad marriage, a loveless
marriage, an antagonistic marriage, so it requires
work, effort and commitment.”
www.northhead.com