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Doing buiness in China – barriers, culture and otherwise

In mid-April, I spent two weeks in Southern China, the so-called Pearl Delta region, to reconnect with my “motherland” and learn about the latest developments of this buoyant economy. Despite having travelled to Hong Kong regularly, I am rarely able to summon enough courage to cross the border. In this post, I hope to provide some personal insights into the Chinese powerhouse economy and how it impacts its people from a socioeconomic standpoint.

The share bike frenzy and colourful chaos

I spent the first few days in Guangzhou, the capital city of Guangdong province which has a population of 24 million. I was very impressed with the user-friendly dock-less shared bikes around the city. The way it works is simple: I download an app with which I can unlock a bike, by scanning a QR code or using a combination that is sent to me, then off I ride! Unlike traditional bike rental service which requires bikes to be returned to a fixed docking station, I am free to leave the bikes wherever my journey ends.

Given that I cycle everywhere in Sydney, I find cycling in Guangzhou with easily accessible bikes and continuous dedicated cycleways a heaven. However, I very soon find out that Guangzhouers zoom and zig-zag around anywhere: on pedestrian walkways, on the wrong side of the road, on grass, and probably on the Pearl River if they could. They have invented some creative ways of transportation: kids sitting on the mudguard or on the V frame, or even on the handlebars. They love to ring the bell like playing music, whether necessary or not.

I also discovered to my horror that bikes are randomly, and sometimes haphazardly, parked in all possible locations: in the middle of the pedestrian walkway, on a fenced off flowerbed, inside residential buildings, and sometimes on someone else’s patio! These bikes are not the sturdiest and I often see bikes missing saddles, broken locks, crooked tiers or scratched off QR codes.

Bluegogo, Mobike, Ofo, Xiaoming, plus a dozen more copycat firms have already sprung up, aggressively competing for territory and investment. There is this story that when a bike shop is doing really well, the Chinese will open 10 bike shops in the vicinity and compete on price. Meanwhile, the Israelis would sell complementary products, like helmets, jerseys, energy bars, to collaborate and turn one business into an ecosystem.

This Chinese share bike phenomenon really strikes me and makes me believe that when the technology barrier is low, everyone can, and will, copy and do it themselves. On one hand Intellectual Property (IP) protection is important, on the other hand, IP is not a silver bullet that will help a company shield off competitions.

I strongly believe the key to success in China lies in continuous innovation, brand building and collaborations.

Canton Fair

I grew up with Canton Fair and still fondly remembered my primary school teacher would tell us twice a year to “get up early to avoid the Canton Fair crowd so you won’t be late for school.” I thought I knew what Canton Fair was! Not until I saw the scale and traffic of the fair after being away for so many years.

For a moment, I thought I was looking at a mirage.

I have lots of experience with trade fairs and I thought the Hong Kong Convention and Exhibition Center (HKCEC) was a giant beast, especially compared to what I have seen in Australia. Multiply the size by x4 for the Canton Fair! Each hall has its own theme and is equivalent to the size of the HKCEC. The aisles are endless and I felt so tired after walking just a couple of aisles. Most of the stands sell similar products and buyers really need to know what they are looking for and how to bargain HARD.

What I have observed is many factories at the Canton fair make clever imitations of Western goods. A lot of overseas buyers would hold images of products they have “observed” at the Hong Kong or US fairs and are discussing with factories on specs and production capabilities.

The tip here is, when you are in China, you should start building a relationship with your suppliers, treat them as a partner, visit factories to inspect product quality and working conditions, discuss product feedbacks and gather insights into their manufacturing capabilities.

Otherwise, Chinese factories merely want to earn money from you – not necessarily with you – especially when you are also trying to give them as little money as possible.

Cashless mobile payment and the impact of e-commerce

China is either 20 years behind or 20 years ahead. China was the first country to introduce paper currency during the 11th century, and today it is the largest mobile payments market in the world. While we are still fiddling with cash in Australia and Hong Kong, the Chinese are already embracing the cashless mobile payment using either Alipay (owned by Alibaba) or WeChat Pay (owned by Tencent). I could even pay the street breakfast dumpling vendor via Alipay or rent an umbrella by scanning a QR code! Save for a rainy day, right?

E-commerce is also dominating people’s everyday life. When my Chinese friends talked about what to buy, they will take out their phone and log straight onto Taobao. I remember I was lying on a sofa one evening, and browsing through different Taobao categories and shopfronts, ended up buying a few items I never knew I needed.

The impact of e-commerce is disastrous to some. Brick-and-mortar shops suffer from reduced foot traffic, restaurants are struggling to survive, and shopping centre stores have become more of a brand building showroom than actually making a profit. Lots of traditional small businesses have to adapt to the online world of slimmer margins.

In summary

In an increasingly globalised world, China is one of the few countries in the world where I have a strong feeling of being an outsider (despite my Asian background). Its own culture remains very strong – the Chinese have a unique way in how they see life and how they interact with each other. Sometimes I don’t think they are very happy because they are taught to always chase the NEXT big thing regardless their achievements.

There is no black and white in China; the closest you get is the negative list!

I hear a lot of my clients say “this is not right,” when things go south. When you think it is too hard, it probably is. To crack the Chinese market, it really takes a lot of determination, persistence, and commitment to succeed in the face of all the obstacles.

Please feel free to reach out to me for advice on how to enter the Asian markets, or simply for cultural understanding of the middle kingdom. All you need to offer is a cup of good coffee!