I just saw a ideo about the commercial and trade situation in Liuzhou, and thought it would be a good one to share with all of you out there. Nearby Guilin is predominately focused on tourism, and since Nanning is the capital of Guangxi Province, it has a necessarily broad focus. Not so in Liuzhou.
Liuzhou has a much more specific focus on industry and commerce. As the video says, it is much more than a regional hub, but key to the trade in all of Southwest and Southern China, with wholesale and retain network cooperation reaching to East China.
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I recently had an e-mail from a foreign business person asking me to hunt down a Chinese product. Well, that is basically what we do, so at first sight it looked good. The one strange part of this deal, though, was that it was meant for use in a Chinese factory.
In other words, I, myself a foreigner to China, was asked by another foreigner to find a Chinese product for a Chinese factory, when more than likely, there are dozens of people in that factory who could have done just as good a job as I could have in finding the product since they are Chinese nationals. Funny. Seems like taking the long way around to me. All I can assume is that this deal has more than meets the eye.
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I had a very interesting conversation with a friend of mine today about the feel or mood of a restaurant in China as interpreted by the Chinese, particularly in the menu and how products are sold and marketed. He is Chinese American, working in China, and many times makes comments that really make me think about how to apply business practices for the Chinese culture.
The comment went something along the lines of, "some restaurants might have excellent products, but many foreign-run restaurants sell the food in such a way that the Chinese customers just feel like you are saying they are stupid." They lose face. I had to ask him to explain.
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Well, having spoken so much of Ronaldo's issues with the local Liuzhou Golden Throat Lozenge company, I thought it only fair to show some of the (it seems to me) proper usage of a famous footballer's image for commercial purposes. Though, I would guess, this is not exactly the image Ronaldinho (otherwise spelled Ronaldinho, if you who don't do the tilde-ized N) was expecting when he signed with Lenovo computer company.
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Just remember, when this becomes the newest and best addition to the Olympics, you heard it here first: it looks like the Beijing 2008 Olympics are going to introduce tickling as an Olympic sport. I think we can expect the average age of Olympians to drop a little, for as we all know, the younger folk are the champions of tickling.
Oops, it looks like they mispelled "tickling" as "tickeling" too!
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An almost identically named article from Reuters talked about the gains coffee is making in China, not only in the amount of coffee consumed, but the production of coffee beans as well. Chinese homes are increasingly drinking coffee (albeit overwhelmingly instant in the home) and Chinese coffee producers are a strengthening presence in the world coffee trade.
I have talked about the coffee culture in China before, but I was very interested in what this article had to say about China's coffee production. Though only briefly, they did hint toward the same conclusions I see for China's coffee beans.
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Sure, every business has information that is best kept private. In China, though, it seems that so much is considered a trade secret that nobody is ever able to benefit from open communication. And in many cases, if not all cases, the customer is the one that loses in the end.
How do we provide customers with the best possible product and service and still protect those unique products or services we have? Better yet, how do we decide what is kept secret or private?
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Sometimes I feel like a micro-manager and sometimes a macro-manager. Really, we need a bit of both in most of the situations business throws at us. I have been thinking about this a lot recently as I work with a couple of Chinese contractors who are renovating the cafe New Frontier is starting out in the beautiful, though rural regions of Guangxi Province.
Sometimes, I feel like I am nit-picking every detail of the cafe. Yet, my contractors' "interpretation" of my vision for the cafe is just not what I was going for. And though this is specifically speaking of decoration of a cafe, I am finding it so applicable to our communication with all coworkers, especially Chinese coworkers.
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What is the most effective way to advertise in China? In most cases, I would have to say television, whether national or local, because surprisingly more than even Americans, Chinese are absolute TV addicts. Beyond television, though, what media best communicate to Chinese people?
I live in a small town, and more to entertain myself than to provide information directly appilcable for all of you readers, I want to relate the simple and effective advertising methods used out here in China's smaller towns. And, I am not talking about China's second and third tier cities, but actual small towns, with populations below 100,000.
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For established, globally recognized companies, choosing the Chinese language name for your company really does not have much flexibility. What if just starting up the company though? Why is choosing a Chinese name so difficult?
Linguistically speaking, Chinese has a very limited sound system—completely different from being a limited language—and representing words or names from foreign languages is just going to be awkward. You may find that perfect, catchy, easy-to-remember name in English, but moving that to any language is a challenge. In Chinese though, we all face a unique set of barriers.
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Driving along the highway, a Chinese friend of mine commented on how well suited the land was for a golf course. Now, this is a small town guy, and I would bet good money he has never even swung a golf club. But, to give him credit, he was right.
We talked about the high expense of golf, the equipment, the green fees, the clothes, but where we ended up is the benefits that come from golf. For many, not only is golf a chance to relax, but it is the meeting room in which the most important deals are made or best plans for the future are forged.
Sure, China is catching on to golf, and in the future golf may take the prominent place it has in other regions around the world. Where is China's informal board room for now though?
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China has set a new, and drastically lower, limit on the amount of money expats living in China can exchange. The new regulation took effect 1 February 2007.
Now, foreign nationals can exchange only US$50,000 per year. Well, that is, only $50,000 before the bank starts asking questions about how the money is used and asking for receipts and invoices. For many, the sight of such a big number immediately relieves all fears of this limit ever becoming a problem, but as soon as you take a second look at annual rent costs in China's big cities, medical needs, and childrens' education, $50,000 begins to look way too small for comfort.
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New Frontier China focuses on China's rural resources, human and natural, but Southwest China now has a new Liuzhou-focused consulting firm focused on connecting the city of Liuzhou with foreign development partners. As stated on the PCFSS website, their firm has been formed to "provide intellectual and cultural bridges between the city of Liuzhou and the United States of America".
Judging from their about page, the firm conducts more than just business consulting. They are working to help "bridge the business and cultural gaps" in four specifc areas: in commerce between businesses, in industry for factory management, for hospitals and their medical staff, and in schools for the field of education.
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On a recent trip to Luizhou from our smaller town, I found a humorous, but instructive diversion. Certain sections of the road are toll road. One of the toll booths is located near a village which sets against the highway.
Our driver turned off the road just before passing through the toll booth. The village has set up a little toll booth bypass system. The toll is whopping CNY 7 (less than US$1), but you can go through the informal village toll system for CNY 3!
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How much difference would good customer service make in a business in China? I think I could confidently say customer service in China is still an undeveloped concept, and has not been applied beyond putting up signs to mark where such service should be happening.
Customer service is that "customer knows best" mentality, a way in which businesses interact with customers which shows the value of a customer to the business. Chinese businesses rarely show any value in their customers, and I can only imagine they would appreciate it if they were on the receiving end.
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When you are young and inexperienced, you think you can conquer the world. At least, that is how I feel right now. I think, though, that even the not-so-young and far-more-experienced ones face much the same problem when starting up a new business.
When I look at it that way, I start to think it has less to do with thinking you can conquer the world, and more to do with that common human fault so many of us have: deafness to good advice. We have a hard time listening to others tear apart our plans when we just know in our gut that our idea is the best. What I have learned today is this: as soon as you think you are right and have achieved that good startup idea, you have set yourself up for a world of hurt.
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How do we know when our foreign business in China will have enough business? The short answer, of course, is market research. That, though, can take many forms. Some people seem to have a knack for putting the right business in the right place. The rest of us, feel as if we are shooting in the dark the whole time.
Business plans are certainly an essential piece of the process, but why does it seem so few people write one? How essential are they? And especially when we want to start up a business in China, often, doing the proper amount of research to write an intelligent business plan is the most difficult link the whole process.
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What does it take to start a business? What does it take to start a business in China? I am always trying to learn more myself, because there are an infinite number of situations and types of businesses, and the answers to these questions change depending on the situation.
Just today, I listened to a speaker talking about starting up businesses, and he highlighted several general aspects that apply to all business start-ups. Depending on the type of business and the particular situation, different points will be more or less important. Having talked to so many folks that do not know the basics, I thought it would be helpful to talk through some of them.
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A friend of mine passed a China Daily article on to me that I just could not pass up mentioning. Evidentally, Chinese government officials are doing more than just inviting investors to a round of golf. That idea is too stale and average, I guess. They have to be different.
So, they will form a golf team. I will have to say I am a little confused. I do not quite understand how that is any better than non-organized groups of government officials inviting investors to some golf. As the magnet on my grandmother's refrigerator so wisely re-stated: "if it ain't broke, don't fix it."
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It seems individual experiences with the internet after the Taiwan earthquake, which damaged undersea fiber optic cables, differ wildly. That is just how the internet and computers are, don't you think? It is hard to give an evaluation of the internet for anything so broad as a country, much less a big one like China, and really it comes down to so many unknowns: city connections, users online, server locations, personal comptuer speed, and who knows what else.
I just read a weblog entry on CNET Asia from another foreigner living in China lamenting the loss of internet speed and usability after the earthquake. The difference is that his and my experiences seem to differ quite a bit. The services I praised in a previous entry about the state of the internet in post-cable-damaged China are the exact ones he said were doing poorly.
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How viable are foreign businesses in China's small towns, especially at a county level? A couple days ago I was talking to a friend about restaurants, travel service firms, and guest houses in these small towns. Some of these ideas are working and some are not.
These small towns are a completely different business environment from the cities and even prefectures. On one side, because they are smaller, the lack of volume or traffic is an issue. On the other side, a foreign business may be able to provide the only such service or product without any fear of competition.
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What kind of investment is on county governments' wish lists? Quite obviously, every county will differ, but looking through the governments' investment wants can bring up some excellent ideas of where the rural economy is headed.
I have mentioned before that the number of tourism-related projects took up almost half the list of the local Investment Guide. What else was on there, though? What does the local government envision, and how worthy are they as investment ideas?
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Is there even the slightest possibility foreign investors are going to put their resources into a rural Chinese county? Investment opportunities await, sure, but it is going to be a rare foreign business person that would find any interest in any particular county in rural China.
That really is the key, I think. There would almost always be some particular interest in an area before foreign business people would even take note of county level opportunities. The vast majority of foreign business will stay in the bigger cities, the regional city centers around which almost everything revolves.
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The broken fiber optic cables connecting Asia and the Americas has some interesting effects. I have read various reports (all from Asian news servers, since Western sources are all offline for us) about different Southeast Asian, Central Asian, and East Asian countries making it back online since the earthquakes, and that may well be true for some, but things are a little different out here in the less-connected parts of China.
The China Daily article states that Chinese connections are back up to 15%. Sources from India, Singapore, and others have said their connections are almost back up to normal. That is great for them! But here, American servers are basically non-existant and European servers are slow, but accessible.
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I have mentioned the cafe idea before as well as some of the process of discussing business ideas with the board of accountability we have for New Frontier. One of my board members is also working in China, has run a cafe here, and is looking to set up another cafe. He knows the difficulties of the food industry in China, and here are some of his comments:
Though I know and understand the difficulties I faced running the cafe in Liuzhou, I have found that the situation changes drastically every time you change location in this, sometimes bazaar, country! On the other hand, some things remain the same. In any case, I thought I could discuss some of the issues I have wrestled with through it all.
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Not that I am surfer, since we do not exactly have the waves for it in Texas and Oklahoma where I was raised, but the analogy seems to fit well for the occasion. Too many companies see the great successes of business in China and try to bring in their foreign company, foreign name, and foreign prestige and pull of big business in China. For many, the wave has passed.
Recently, I have commented on how online commerce, co-op sites, and such are making a difference in China, even out in rural villages. Though many Chinese eagerly seek foreign products, Chinese are still proud of using their own products and services, especially when it comes to what websites they frequent.
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What is the market like in China's second and third-tier cities? Companies are scurrying to jump into the China fray, but many completely miss the opportunities for their products and services which lie inland.
International News sources balk so much about the income gap in China that many foreign companies assume any Chinese city they have never heard most likely does not even have running water, much less the ability to buy foreign goods. To those companies who do not have the insight to truly evaluate the China market and the opportunities lying in wait, fine. Smarter companies who know what they are doing will make a killing on the second and third-tier cities while the losers try to edge their way in to an already blanketed market in China's famous, coastal cities.
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I will definitely agree with a government video I watched recently that Liuzhou has made several improvements to help simplify and aid foreign invesment. It may not be among China's "golden cities" for investment, but it is certainly a great opportunity, found by many, lost by many more.
Six years ago, when New Frontier Consulting was starting, obtaining a business license required running back and forth between all corners of town to an incomprehensible number of government bureaus to obtain their unique forms, seals, and permissions. Now, though China still does a fine job at keeping a respectable amount of red tape in any such venture, Liuzhou has certainly aided the process with the adoption of their "administration hall."
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I have gone through many stages of emotions towards going into the food business in China. I once hated the idea, then walked alongside a good friend as he managed a small restaurant, and now, seem to be rethinking some of the positives and negatives for my own situation.
I was recently talking through some of my own business opportunities with one of the members of my board of accountability. He is far more experienced than I, and I was really struck by his reactions to my business ideas. Everything I said met with long responses including, "good idea, but full of risk, and maybe not sustainable in the long run." Then, my wife mentioned her dream of a cafe, and he instantly replied, "that could work." The quickness of his reply made me rethink a few things.
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How does Guangxi and its booming city of Liuzhou compare with other Chinese cities and regions in terms of GDP (Gross Domestic Product) and the ability of residents to afford products and services?
For foreign businesses looking to invest in China and trying to find the most suitable region and city for that investment, market opportunity and costs of running a business are obviously going to be the most important factors in any enterprise, and those differ widely from city to city in China.
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Southwest China has attracted a multitude of non-profit organizations, and in the past few months, the Chinese government has stopped renewing the registrations for these organizations (at least the smaller ones). Many of them are turning to business. What is going to happen with the non-profit minded folks flocking into the business world?
Many plan on continuing very similar activities, but start a business to do so. Is it just me, or does that not make much sense? Sure, organizations often use businesses to actually complete some projects, but can a strategy which is funded become a strategy that brings in money? Non-profits tend to have money flowing out, not in.
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For those who have been around China for a while, this is nothing new, but applied to business, this is a trait that China desperately needs: creative problem solving. Without it, China will never be able to come up with new and better solutions, but can only continue to copy what the rest of the world does.
Creative problem solving is the foundation for development and innovation. This is not only the solution to help China move from low-tech manufacturing to more advanced. It is also the key factor in whether China can truly exceed the world's perpetually developing nations. This is not a division between developing and developed, but rather between those who copy and those who creatively come up with new ideas.
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I have seen an increasing number of foreigners locating in smaller Chinese towns to open up business: restaurants, guest houses, travel service firms, consulting firms, and English teaching centers. We all think we have a good business idea when we start out, but inevitably, it changes along the way.
What are some of the lessons that we can learn now, for free, without wasting time when trying to establish our business in China? What kinds of ideas succeed in China's not so well known cities and towns?
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The World Bank released a report last month entitled "Governance, Investment Climate, and Harmonious Society: Competitiveness Enhancements for 120 Cities in China." The report has loads of information, and with a specific city-emphasis, it much more applicable to those seeking to invest in China than any country wide report would have been.
The section on Southwest China reveals much useful information to help compare the major cities in the region in areas such as taxes and fees, days to clear imports and exports, government involvement in business, average annual salaries, and more.
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When is doing business in China a dream that will never be realized and when is it a perfectly rational reality that can work on a very financially viable level? Is the answer as easy as hard work and perseverance? I think so. Well, mostly. I have found one more trait a little hard to come by at times, at least for myself: focus.
The majority of entrepreneurs I see in China seem to approach their business one of two ways. One, just open the default small consulting business and do a little bit of everything that can be done to earn money. Or two, extreme focus on one business idea, even if that venture is not really profitable. Where is the happy middle ground?
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You may ask yourself: "What do I look for in a manager for a Chinese business?" "Who can I trust to run the business as it should be run?" Basically, how do you choose the right people? Who do you trust? When working in China as a foreigner, these are important issues that too many people skip past. I have made many of these mistakes, and try to help others avoid them.
It takes time to find and train the right managers for any venture in China. For successful business, more face-to-face time will be required, time to see and evaluate (with your own eyes, and not from reports) how the manager functions and to help them do the job as it needs to be done.
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What happens when you are a tea farmer from the Chinese countryside and your buyer receives shipment of your tea, disconnects his phone line, and disappears without paying? That is exactly the situation of a Dong friend of mine right now.
I do not want to suggest this is a common occurance, but once is enough to cause very serious damage. What can a rural tea farmer do when the buyer is half way across the country? What affects will this leave on the local economy? How can crop theft be avoided?
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Tourism can play a very important role in economic development—we will assume something tour-worthy is available. Southwest China wants to strengthen the tourism industry in small towns and big cities alike, and much of the development for tourism is on a scale for which only the Chinese government can take responsibility.
I want to look lower level needs, though, needs that can be worked on with something less than millions in funding. One big help a small foreign company could provide to help develop small town tourism is English. But not just teaching English, rather going beyond that and teaching foreign cultural awareness.
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When you think of marketing rural resources from China's countryside, you might not think of tourism, but these are changing times, and the local government most definitely classifies the mountains and minorities as travel worthy "resources." Sounds strange to me, but let's look into it.
Regardless of whether you really want to call it a resource or not, tourism is a big thing in these small places. Nearby Guilin is one of China's biggest tourist attractions, and is the best example of the type of tourism most prevalent in Southwest China: scenery and nationalities.
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Just after writing of my own struggles with Chinese business vocabulary a few days ago, I read today that I am not the only one with these struggles. Evidentally, finding Chinese translators (that is, Chinese nationals, native speakers) who know all these detailed Chinese words is not so easy either.
That sure makes me feel better. And it certainly explains why I often feel Chinese people, sometimes even those working within the industry in question, do not know all the words I thought they would know. This only reaffirms the need for good translators, good sourcing consultants, and a spoon full of preparation for successful business dealings in China.
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It seems that trying to find thrown raw silk in China is not so straight forward a process. It is partially an issue of terminology in Chinese and partially because people think they know what you are talking about.
It took me a while to find out, but Chinese hass a few different ways to say thrown raw silk. Just plain "raw silk" was easy, but when I tried to make it "thrown," confusion abounded.
Every seller I found online seemed to use slightly different Chinese words for the 'thrown' part. When I started calling some local silk producers, the first guy actually said X silk is the same as Y silk, which the next person I called completely contradicted. Does anybody know? Solid research was the only thing that solved my problem.
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So how do you find the resource or product you are looking for in China? If you have tried using the internet with little or no success, you are definitely not alone.
Alternatively, you may have found something on the internet, but you never could make contact with the company. Nobody replies to e-mail and calling would require a Chinese speaker. Again, you are not alone. Just finding the product is not enough, the end goal is buying it, of course.
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My wife and I were recently flying back from Bangkok to Guilin on Bangkok Air, where we repetitively heard, "Bangkok Air, Asia's boutique airline." I had to work my brain around that one and try to figure out what they were talking about.
"Boutique" keeps popping up. Today, I read an article about the positives and negatives of working with global service firms in China. It raises the issue of whether many businesses would not do better to look into China's "boutique expat service firms."
It is all a matter of what job you need done and how you want it done. Sometimes the price tag for the "big guys" is not really worth it.
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If the Chinese economy is booming now, what are the chances it will bust? The Chinese government knows quite well that if they do not intentionally slow down the economy and growth, a devastating bust waits in the near future.
One of the primary forces of growth is construction. Realizing how much of the local and domestic economy is built around the construction industry, I thought a quick round of market research in our small town would provide some interseting results.
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