4 cardinal rules for doing business in China

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ORLANDO, Fla.― 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 this week’s International Dairy Foods Association annual meeting “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 strong-flavored 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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Patrick    
Wisconsin  |  January, 31, 2013 at 10:24 AM

Rule 5. If you want to produce a product for the Chinese market, produce at least half of that product in China. The U.S. should adopt such a rule for itself.


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