How to do business in China: Understanding the creative industry

Is doing business in China as different as westerners believe?

China and its big-spending 1.3 billion citizens continue to represent a lucrative and enticing market for brands and marketers. However, finding success in China can be challenging.

Companies not only have to navigate a unique media landscape without Google, Twitter, Facebook, YouTube or Instagram, they also have to embrace new platforms such as WeChat, Weibo, iQiyi, Douyin, among a host of others. Then there’s the language barriers, cultural differences and societal quirks that can present challenges when attempting to do business in China.

There are many examples of brands that have stumbled when it comes to China, and the recent disasters and missteps by the likes of Dolce & Gabbana, Zara, and Burberry serve as reminders about the importance of understanding and embracing the market.

In a bid to uncover the secrets of success, The Drum asked a variety of experts for their views on how to do business in China.

“Business in China is substantially different than other markets,” says Humphrey Ho, managing director, Hylink, China’s largest independent digital agency.

“This is all down to a few points: business is personal and a heavy face-to-face culture demands frequent maintenance of relationships. Hierarchy is important both in title and in gravitas as is proper business etiquette (from drinking to business cards to how to refer to one another in communications). WeChat and instant messaging have replaced emails, and 'China Speed' is something that can be disorientating both at the beginning and in daily work. Execution strategy is as important as a business strategy, and delivery is always encapsulated by a fear of failure.”

As Ho makes clear, China is working at a different pace to many other markets. The countries rapid adoption of the internet – it boasts more than 800 million users ad 98% of these users access the internet via mobile devices – which was done via mobile phones rather than desktop computers has seen email communications fall by the wayside as the Chinese people opt for instant messaging, even in business. This adoption of social media channels for business-based transactions has also lead to a blurring of the lines between the beginning and end of the working day.

“Work and personal life are strongly interconnected in China,” says Krys Piotrowski managing director, business development, at Publicis Media Greater China.

“The business day does not have clearly defined start and end times and the expectation is that you can be contacted well into evenings and weekends. The uptake of WeChat has further compounded this anytime business culture, replacing phones and emails as the preferred method of communication. You’re as likely to be scanning a business partner’s WeChat QR code, as you are exchanging business cards. In the West, Facebook is mainly personal and LinkedIn is for business, while in China, WeChat seamlessly integrates both worlds.”

“Expectations in China are that everything can be done immediately and if you cannot fulfil something in the required time, there will always be someone else that can. The pace can be equally exhilarating and exhausting, and it is certainly not for everyone. If you can sync with the rhythm, and have a tightly controlled process in place, you can achieve a lot in a single working day. Client briefs often have much shorter turnaround times which can be initially overwhelming but equally you get things produced and delivered to match those aggressive timelines,” says Piotrowski.

Rene Chen, partner at JKR Shanghai, believes these differences stem from the fundamental differences between Chinese and western cultures.

“In a big way, business is business everywhere. But, because Chinese culture, in many ways, is very different from Western culture, doing business in China differs from other markets. Understanding the fundamental differences will be the first step because that will eliminate plenty of queries.”

Chen says to understand these fundamental differences between Chinese culture versus western culture, people must reflect on the two different approaches, such as: “Intuition versus mathematics, informal versus formal, fluid or ambiguous versus definitive, contextual versus tangible and loose versus rigid."

“In all,” she continues, “it’s like two different systems, two different brains: art versus science. So, with these fundamental different “operating systems”, the whole ways of working will be very different.”

However, as many are quick to point out - China is changing. As the country continues to modernise at a rate of knots and as external education about the market, its people, platforms and processes increases, the differences to doing business in China are dissolving.

“Business in China is different from business in other markets,” says Rupert McPetrie, chief executive officer of MediaCom China. “But, there are also a number of common and similar areas and ways of working. The differences reflect the local market specifics, in terms of customs and culture, and the differing histories that say Western Europe has compared to China. It is also important to note that the level of difference varies significantly in different industries and different regions and cities.”

Kevin Mann, general manager, marketing and new business, at OMD China, agrees. “The extent to which Chinese businesses are entirely unique can be exaggerated, and it is often a fear among outsiders that doing business in China seems impossible. There are both opportunities and drawbacks for Western businesses, and maintaining an open-minded perspective is key to navigating these. Cultural differences pose challenges to those who are unwilling to change their practices and approaches."

"While Chinese markets have modernized rapidly in the last couple of decades in order to collaborate with other markets, the companies that approach with a flexible attitude are still the ones who have a higher chance of succeeding in China,” says Mann.

While flexibility is key, so too are business motivations, according to Tim Cullinane, the vice president client partner at Critical Mass Hong Kong, who warns that new arrivals need to focused about the market goals and objectives.

“Don’t go into China for the wrong reason. A lot of people look at China as a vast population and therefore a vast opportunity. But a population isn’t the same as a market. Understand that you’re not necessarily moving into China, you’re moving into a part of China. The cultural, language and business differences between main cities like Guangzhou and Shanghai can be significant enough before factoring tier 2 and 3 cities.

“Adapt to the local market, don’t expect the market to adapt to you. That means both what you do and how you behave. Be prepared to be in it for the long haul. There is a wealth of opportunity in China, but it will take time and patience to build the necessary relationships and skills. Get comfortable making decisions without having all the data. Most important of all, there is no magic formula,” says Cullinane.

Yukun Bi, head of planning at Hylink agrees, “China is a unique market with a large consumer base spread across vast geographical regions. Chinese consumers also differ greatly from western consumers in terms of user habits, preferences and emotional desires. It's important for companies to not underestimate the complexity of China and not abruptly make any brash decisions before thorough market research. Spend some time in China before doing business there.”

While this advice may seem obvious, Chen warns that for new entrants understanding that they do not have all the information is crucial.

“You should always remember this concept of “you have not been told the whole of everything” in all kinds of big and small encounters. So, you must continue to ask and ask and ask and you will be amazed how much more you can get by not giving up and asking questions, ” adds Chen.

All the experts agree that understanding and respecting the market and its customs are crucial to success and the more a company can adapt and localise the more positive an outcome for all involved.

Piotrowski says, “It is vital to understand that there are reasons for why things are done in a certain way in China. They are often deeply rooted in cultural and societal norms and as a Westerner you may feel they are at odds with the way you perceive the world. As an example, it is difficult to understate the effect that collectivism has had here over the past few decades, compared with the West’s focus on the individual. You can often see that people here will place family or organisational obligations over individual achievements. The key to success is understanding and respecting the nuances, without trying to project your own belief systems.”

McPetrie says, “Adapt and be flexible. You will not succeed if you simply try to copy and paste what you have done before in other countries. You will have valuable and transferable experience and expertise, but the most important advice is to take time to listen, observe, and understand the local reality before you take actions. You must respect the local customs and culture and adapt yourself to that new environment.”

This feature is the first in a series which will explore how to successfully navigate the China market from a business perspective.

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