Ten Tips for B2B Selling in China

An Expert's View about B2B Distribution in China

Posted on: 15 May 2012

Key considerations if you are selling or planning to sell B2B products in China. Tips are short, simple and pragmatic.

CHINA SAGE CONSULTANTS (上海) Co., Ltd. DaAn Plaza, 829 YanAn Central Road, West Tower, No. 10-C, Shanghai, PR China 200040 Ph: +86(21) 6247-3561; Fax: +86(21) 6247-3562 TEN TIPS FOR B2B SELLING IN CHINA TIP #1: BE INTELLIGENT – BE SELECTIVE Don’t be misled by the “1.2 billion consumers” in China. Nearly 80 percent of Chinese people still live under rural conditions and have no real buying power; even in developed areas you’ll find Chinese buying behaviors that are very different than you’re used to. China is abundant in opportunities but you must pursue the right ones. Since its markets are rapidly evolving and highly non-homogeneous, selling success is often situation dependent and sometimes even arbitrary. Be selective in what you commit to or you will waste ample time and money. TIP #2: ENSURE YOUR PRODUCT FITS Don’t make assumptions for China based on your western business experience … this is a sure road to failure. Instead, carefully assess how your offering fits in the China market. Culturally, the Chinese are very price-sensitive and price will always be an issue. Still, some high-value higher-priced offerings do have their place. This is especially true for certain B2B engineered products. To sell successfully in China, you’ll need to ensure the following are true. ∞ Your product and/or service really do offer real performance advantages that clearly offset a premium price. ∞ There are no closely comparable Chinese alternatives. If there are, they’re bound to be 50% lower or more in price and the first choice of most buyers. ∞ For anything more than a one-shot deal, your product must not be easily duplicated by Chinese competitors. Products with high proprietary content and/or bundled specialized services have the greatest chance for sustainable sales success. TIP #3: HAVE THE RIGHT ATTITUDE Nothing China is a slam dunk. Therefore, be sure both you and your organization have the right attitude when taking on the China challenge. The right attitude will significantly increase your chances of success. With the wrong attitude, expect nothing more than a long list of frustrations. A good China attitude includes the following characteristics. ∞ Patience ∞ Stamina and persistence ∞ Perseverance ∞ Friendly sincerity mailto:inquire@ChinaSalesInc.com, http://www.ChinaSalesInc.com Copyright© 2003-2009 China Sage Consultants, Inc. All other rights reserved. Page 1 of 4 ∞ Firmness to press your point ∞ Open-mindedness ∞ Flexibility ∞ Non-defensiveness regarding what ∞ Tact and tasteful sense of humor you hold as sacred ∞ Technical knowledge of product ∞ Respect of differences ∞ Willingness to use simple clear ∞ Sensitivity and desire to really language to ensure communication understand the “why” of situations you effectiveness encounter ∞ Honesty and frankness TIP #4: DON’T DEPEND TOO MUCH ON THE LEGAL SYSTEM, YET Spurred by membership in the WTO, the Chinese government is working rapidly to upgrade the legal system. Still, the system remains lacking in many areas including qualified professionals to run it. Protection afforded to individuals and business entities is inconsistent and often biased. In a legal dispute, the order of favor tends to be 1) Chinese party local to the jurisdiction, 2) Chinese party not local to jurisdiction and 3) foreign party. The Chinese legal system will eventually align with international practices but it will take some time to do so. Before doing business in China, you should ∞ ensure the maximum negative impact of a deal gone bad is survivable ∞ establish possibilities for friendly conflict resolution outside of the courts ∞ enlist the support of China knowledgeable legal counsel TIP #5: SEEK EXPERT ADVICE Unless you have a lot of time and money, going-it-alone and learning to be effective in China is cost-ineffective. Seek the assistance of experts that know China and have already done what you are trying to do. Experts come in many forms including consultants, attorneys, the US Commercial Service, Chambers of Commerce, businesspeople, etc. You can find many good resources simply by asking around. Just be sure that whoever you choose to assist actually does have the experience needed. We hear there are many “China experts” who interestingly enough have never been to China! TIP #6: KNOW YOUR STRATEGIC INTENT Are your selling efforts intended for short-term gain or to build a viable long-term business? Both can add revenue but the timing for profitability can vary widely. If your effort is project oriented, you’ll want to earn money on each transaction and may choose to neglect long-term considerations. If you are seeking to build a business, your commitment and patience must be much greater. Each step in the market should be scrutinized and critical relationships established and nurtured. The investments of time and money will be significantly larger before returns are realized. At some point you’ll need to establish a legal entity and, unless your product is highly differentiated, add value in China to compete with locally available alternatives. Knowing your strategic intent early will support good planning and decision making each step of the way. inquire@ChinaSageConsultants.com, http://www.ChinaSageConsultants.com Copyright© 2003-2012 China Sage Consultants, Inc. All other rights reserved. Page 2 of 4 TIP #7: FOCUS ON RELATIONSHIPS As westerners, our primary concern is generally the business at hand. We want to know what the objectives, contractual terms and chances for profitability are. It’s not a requirement to personally like someone to be able to do business with them so long as there is mutual trust and respect. This is not so in China where relationship can override the business aspects of a deal. The Chinese are strongly biased toward doing business with people they like and feel they can trust. Our pragmatic “get on with the business” approach tends to put the Chinese off. If you want to do business in China, be prepared to do it differently. Be patient, adjust your style and spend time relationship building with your Chinese counterparts. TIP #8: RESPECT CHINA & THE CHINESE What greater way to respect another country and its people than to learn more about them. We suggest you spend time understanding the Chinese and their country. Read some books, have conversations, and do a little research. It’s work but with every insight gained, you’ll be that much more effective in working with the Chinese. If you respect their culture, you give them “face” something very important to the Chinese. Be humble in your approach and your China efforts will progress more smoothly. If you can’t follow this prescription, that’s OK. Simply have someone who can take the role of your China lead. TIP #9: DON’T BE OVERSOLD You are bound to encounter people who make grandiose claims regarding how they can help you in China. The motivation is money while the character is one of the following: 1) the overzealous salesman who may or may not be aware he has no chance of achieving what he says he can, and 2) the outright crook who’ll just as soon take your money, clothes and pet canary in the name of greed. Without talking reasons, a large number of Chinese put the end above the means as they aggressively maneuver for personal gain. Be wary of those who make it sound to good or too easy to be true. Do your due diligence and seek out sincere and truly capable Chinese of which there are many as well. TIP #10: TEAM UP WITH THE RIGHT PEOPLE Unless you plan to live in China and personally manage your business there, you will have to team up with the right people in order to succeed. Doing this requires you fully understand your objectives as well as the people who can best help you achieve them. But know the people needed in a western business environment are different than those needed in China. Talk to experts before profiling your employees and/or partners and then seeking them out. Pay close attention to ethical orientation, honesty, stability, communication ability, selling orientation (you need value sellers) and general thinking (e.g. is the person internationalized, etc.) before making commitments. inquire@ChinaSageConsultants.com, http://www.ChinaSageConsultants.com Copyright© 2003-2012 China Sage Consultants, Inc. All other rights reserved. Page 3 of 4 ABOUT CHINA SAGE CONSULTANTS China Sage Consultants first setup in California in the spring of 2003. By April 2005 we had made our Shanghai-based “China WFOE” operational to ensure an effective execution capability in China. Our core focus is helping U.S. SME’s sell and buildup their businesses in China. Highlights of our business: ∞ Target Clients - Small to mid-size U.S. companies desiring to grow sales and build sustainable businesses in China ∞ Target Products - B2B engineered-type (technical) products ∞ Core Business - Outsourced sales and business development programs through our flagship China Sales Incubator program ∞ Competency - Finding and managing the right people to achieve sales and business development objectives in China ∞ Business Consulting Services - sourcing, project management and key personnel recruiting support CSC always works hard to promote an understanding between all relevant Chinese parties and our U.S. Clients. We have an open and friendly company culture focused on providing good client service and the continuing development of our team members. inquire@ChinaSageConsultants.com, http://www.ChinaSageConsultants.com Copyright© 2003-2012 China Sage Consultants, Inc. All other rights reserved. Page 4 of 4
Posted: 15 May 2012

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