Opinion: 5 tips for doing business in China

China is full of opportunities and risks for foreign entrepreneurs. If you're thinking about tapping this vast market, here's some advice.

Credit: Courtesy of Alistair Vigier

The author in Beijing’s Forbidden City

Mainland China is full of opportunities and risks for foreign entrepreneurs

This October I travelled to mainland China for just over a month to explore the possibility of opening a Beijing branch of Hart Legal, the B.C.-based law firm where I serve as vice-president. I also wanted to bring fresh organic juices to the country by selling them on Tmall.com, a massive online marketplace. Tmall is owned by e-commerce titan Alibaba Group Holding Ltd., which grew big partly because Amazon.com Inc. and eBay Inc. face barriers to competing in China.
My initial visit was purely for sightseeing. Having studied Mandarin for about a year, I wanted to make sure I understood the culture and the language before committing to open a business.
It was the kind of trip that would be perfect for travellers who enjoyed backpacking across Europe after school—less so for those who like creature comforts or staying at the Ritz-Carlton and drinking afternoon tea.
During my stay, here are five things I learned about doing business in China.
1. Meetings don’t often happen around a boardroom table 
Expect to meet someone for a three-hour lunch or dinner. Gifts are extremely common and expected. Most Chinese don’t count receiving gifts for favours as corruption. When I asked people about it, they said that it’s part of showing respect. 
At the table, most Chinese businessmen will smoke many cigarettes and consume large amounts of alcohol. I recommend taking the position that you don’t drink at all. Once you start imbibing, your fellow diners expect you to keep pace with them. This may involve knocking back six to eight drinks—possibly over lunch.
2. Don’t expect a yes or no 
When you ask a question, you often get the answer, “Let’s see how things go.” It can be frustrating to ask someone to do something and not get a firm commitment. However, if you try to pressure them for an answer, they probably won’t meet you again.
3. The government is extremely important 
In China, the government wants to control everything. The country has a system that I would describe as capitalism with Chinese characteristics. This means that it’s a free society, unless you say or do something the government doesn’t like. I heard and read countless stories of the Communist Party taking over “corrupt” companies. According to my Chinese associates, those businesses got on the wrong side of the government. Were they corrupt? Who knows? Most corruption trials are completely closed.
Keep in mind that Facebook, Google and most other Western media don’t work in China. Fun fact: BCBusiness does work.
4. Things are slow to get going, but once they do, they move fast
Negotiating with and gaining the trust of a Chinese company can take a long time. But once you agree on terms, they expect to start right away, and they want instant results. Also, contracts seem relatively unimportant because many businesses may try to renegotiate them at any time. The legal system in China isn’t as good as it is in Canada, so don’t count on seeking “justice.”
5. Start small
China is a developing country, so it’s full of opportunities and risks. You don’t want to bet the family farm or borrow from Canadian banks to expand into China. Find a business partner there who’s willing to put up half the money and sign leases on your behalf. You want to make sure your Chinese partner believes in your plan and is not taking advantage of you.
Also, remember that your market is not 1.3 billion people. Most of China is still very poor. But the middle class is growing fast, and if you target the top 10 per cent of earners, that’s still about 130 million—almost the population of Russia. 

Credit: Courtesy of Alistair Vigier

Outposts of Western businesses are common in China’s major cities

Beijing: Factory city
In a big city like Beijing, the Chinese capital, one of the first things you’ll notice is the air pollution. Given that China is the world’s factory, it only makes sense that pollution is a major problem. I hear it’s significantly worse in the winter, when factories burn coal for heat. China is taking steps to deal with pollution by moving factories out of its major centres, but Beijing is surrounded by airports and industrial centres.
On the upside, food is good and cheap. My Visa worked in Starbucks but few other places. I was frustrated to see the that the local Subway only took WeChat Pay, a Chinese service. Beijing residents use their cellphones to scan QR codes to pay for everything. I had assumed that a developing country would welcome credit cards, but apparently not. Make sure you carry lots of cash, but be careful of pickpockets. Most Chinese wear shoulder bags for this reason alone.
Strangely, most signs and announcements are in English as well as Mandarin. Most residents can’t speak English even though they’re exposed to it daily.
The Internet block in China didn’t bother me as much as I thought it would. It’s annoying not being able to use Google (Baidu is a poor cousin), but I didn’t miss the fake news on Facebook. The state-run Chinese media is full of articles about factories and the military, and it likes to make fun of Western leaders.

Credit: Courtesy of Alistair Vigier

Renting a bike is an exhilarating way to see Shanghai

Exploring Shanghai on two wheels
Shanghai’s crazy traffic reminds me of Mexico’s. Despite all the chaos, though, drivers seem to know what they’re doing.
Shanghai is far more Western than Beijing. The people are more culturally diverse, and Western stores are everywhere. It rained the whole time we visited, but it wasn’t cold. I could see myself working there.
We rented bikes for a free, month-long trial. Scanning a bike’s QR code with your phone unlocks it for your use. With traffic rules almost non-existent, cycling the streets of Shanghai is liberating!

Among the sights were temples and street markets. My favourites were the Temple of the City Gods and the Oriental Pearl Radio & TV Tower. Although the latter isn’t as tall as the CN Tower, it has a massive glass skywalk that I lay down on. That got my heart pumping!
Five days of stomach trouble. I must have accidentally ingested some dirty water, possibly from washed fruit. There was no time to lie in bed, though. China beckoned to me again.
Disconnected, reconnected
With only four nights left in China, I started to feel disconnected from home. Canadians weren’t messaging me as much. Instead, my Beijing contacts were my new homies.
It’s interesting how quickly distance can change communication. The feeling has continued as I return to my life in Canada. I don’t feel as connected to my law firm or my friends because I have no idea what’s been happening with them. It’s like I started a new life.
China is a country with a long history. If you like testing your comfort level, it’s a great place to visit.
Alistair Vigier is CEO of ClearWay Law, a Toronto family law firm; and a BCBusiness 30 Under 30 winner.