4 cardinal rules for doing business in China

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Dairy Cheese When looking at China’s large dairy-deprived population, the temptation is to supply lots of dairy products so the Chinese can be more like us.

Not so fast….

According to one expert, when going into the Chinese market, the question to ask is “What do they want?” rather than asking “What don’t they have?”

Author Joe Studwell, who has written extensively on the Asian market, gave those attending the International Dairy Foods Association annual meeting in late January “four cardinal rules” for doing business in China. Those rules include:

1. Decide which Chinese market you want to serve. Do you want to go after the high-end, rich people in China or the larger number of people who don’t make a lot of money? Basically, it’s a two-market proposition, Studwell said. To illustrate the difference, he showed a picture of a Porsche automobile for one market and a picture of a motorcycle-powered delivery cart for the other.

2. Ask what they want instead of asking what they don’t have. For instance, it’s one thing to provide cheese to the Chinese market, but it needs to be the kind of cheese the Chinese like. “They don’t want a lot of strongflavored cheese,” Studwell said. To illustrate this point, he showed a picture of a pickup truck that a major American automobile company developed for the Chinese market, but ended up being a marketing failure. It’s not that the Chinese rejected the idea of pickup trucks; they just didn’t want that particular model because it was a two-door. They would rather have a double-cab version because when they go somewhere, they usually go as a group and need more room.

3. Account for cultural differences or adjustments. For instance, in Chinese grocery stores it is common to see live fish for sale. No matter how good a job the seafood manager might do in presenting dead fish on ice, customers won’t trust the freshness unless they see the fish actually swimming in a tank. “It’s a low-trust society,” Studwell said, “so you have to go out of your way to reassure the customer.”

4. Stay the course. Don’t go into it as a get-rich-quick proposition; it’s a longer-term proposition. It’s certainly worth staying the course, Studwell said, because the Chinese will generate a lot of growth going forward.

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newengland  |  April, 09, 2013 at 11:41 AM

Stay the course....yes, what is a typical long- term proposition recommended by the author ?...it seems that we as small/medium livestock companies investing in china for 6-7 years...there are always roadblocks or excuses set by local regulators and generally costly to us ... at the end, small/medium business companies typically breakeven or loose money ..but yes the market potential is still great .....in the future.

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