Top Ten Mistakes Businessmen Make in China  By Stanley Chao  “China Business Plan: A Guide to Doing Business in China for the Small and Medium Size Companies” (To be published in September, 2009)

Below are the most common mistakes and misunderstandings that foreign businesses make when doing business in China.  This is based on our 23 years experience living and working in China.  We would certainly appreciate any feedback you may have on the below points, and would like to hear about your experiences.  We will add comments and anecdotes to our blog page.

Take the trust factor out. All actions must be confirmed with proof. ---------------------------------------------------- Foreigners often complain that Chinese don't understand their business intentions due to a lack of English. This is often wrong. The Chinese do understand your intentions, but wish not to follow or obey them. ---------------------------------------------------- The Chinese will always want to rush you. Be patient, and make the Chinese understand your intentions. ---------------------------------------------------- Don't be too polite. It can sometimes be misunderstood. Be terse, direct and make your points in simple words or actions especially during negotiations. Business is Business! --------------------------------------------------- Don't do incoming inspections after the goods have landed in the U.S. It's too late at that point. It must be done in China, preferably at the factory. --------------------------------------------------- If at a possible, have your own staff in China handling quality inspections. You don't need many, just enough to handle the important issues. --------------------------------------------------- You are never protected by a contract. The Chinese, because of cultural and historical reasons, treat contracts differently than foreigners. They consider it a temporal agreement, subject to change as market conditions fluctuate. --------------------------------------------------- Don't ever do a joint venture. This complicates matters by a factor of 3. Instead, seek distributors, licensing partners, or establish a WFOE-Wholly Foreign Owned Enterprise. --------------------------------------------------- Have all important documents and contracts written in Chinese, with duplicates in English. Use the Chinese translations as the legal, binding document. This will eliminate misunderstandings, language problems, and disputes. --------------------------------------------------- You don't think like the Chinese and vice versa. Understand what makes them different by observing them and learning the culture. You will know how to deal with them better. ---------------------------------------------------

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China Misconceptions