'Bussiness Guide to China : 15 Fallacies of Investing in China' - Frankie Chan

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When the western side of the world meets the eastern side of the world- things are different. It is very important for the business executives to adapt to the eastern side of the world. The book 'Business Guide to China: 15 Fallacies of Investing' in china by Frankie Chan, talks about the 15 things that the management executives should look at in order to be successful in doing business in China. The book covers topics like matrix management, cultural barriers, labor costs, competition and other management techniques that the foreign businessmen should consider before conducting business in China.

China is a big country with about 13 billion people. The foreign investors see a lot of opportunities in doing business in China. There is a general misunderstanding among the foreign investors that when they enter the market they will effortlessly squeeze in the mass market and beat the local competition in no time. This is not true. The foreign investors need to have a specific and clear objective in order to enter the market. The foreign investor's positioning strategy in the market should be very strong for the the first few years as these years are very critical in order to survive in the long run. The rule of thumb would be to squeeze in the mass market and attian a firm toe hold among some top local brands before they plot  more specific medium term starters in order to first beat the other foreign in investors in the  Chinese market. A solid presence in the mas smarket in the early years will give power to the company and products and help them earn the deserved share of market as early as possible. this will help improve their competitiveness in the market year by year and free them from possible pressures of interferences from headquarters and weakening financial position.  The author also tells us about how competition is very fierce in the Chinese economy and it is very important for a foreign investor to be clear about who their competitors are. The Chinese people see a transparent borderline between the local companies and the foreign investors. Although, they are always aware about the possible threats that could come from the other side of the border, they have more head on competition with the local companies in China.

One of the most interesting fact that I learned from this book is that Chinese people not well trained to evaluate and control financial risks, a far as credit control is concerned. Chinese way of accounting receivables must be its absence of any concept of bad debts or doubtful debts. Therefore, we will never find an item called "bad debt provision" in their financial reports, as required by the state. Also, foreign investors should pay attention to the level of account receivables and intensive financial analysis should be conducted from the management whenever the business is reviewed, other than its performance on sales achievement and profitability.

Frankie Chan recognizes language as the biggest barrier while conducting business in China. The fact that people do not understand English and keep interpreters while conducting business meetings can get difficult at times. The foreign investors also should keep an in house interpreter in order to overcome part of the problem. However, the foreign investors need to be open minded and be willing to learn an d adapt to the new culture  and cultivate mutual understanding between two partners. There are few other barriers that foreign investors can come across.  For instance, as opposed to the western cultures where we have many supervisors, Chinese workers are used to taking orders from only one boss. It is also difficult to receive feedback from the Chinese subordinates as they tend to be shy and keep to themselves. They choose their words very carefully when they talk about their opinions.

Overall, the author has done a good job in discussing the points that needs to be taken in consideration in order to be successful in conducting business in china. He has laid out what problems the foreign investors could face in their business venture which could have negative effects on their business. However, with the problems they could face, the author has also explained carefully examined solutions needed to overcome those problems being faced while conducting business in China

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Yes, the cultural aspects of doing business in China can be difficult to learn for a Westerner but the potential upside is incredible for those that can excel at it!

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This page contains a single entry by shar0316 published on May 15, 2010 11:36 PM.

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