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.
As if business were not hard enough on its own, doing business in another culture brings with it a multitude of new challenges. For many, the challenge is the fun of it, but in the end, every business venture comes down to whether it is going to make money or not.
When looking to set up a business in China, how much will our own outsider observations be worth? That is directly dependent on how well we understand China, its people, and culture. And how much will the observations of a Chinese consultant be worth? That is directly dependent on how well that person can communicate across cultures themselves (and how much you trust them). They obviously understand the Chinese culture, but from an instinctive level; expressing that to another culture is a different matter entirely.
Just like any culture, just when you begin to understand China, you learn how little you truly know. They love all things American in one moment, and in the next sentence berate American policy or culture. They will buy bad coffee at an exaggerated price in one location, and steer clear of the real deal at a better price at the next place. That is just the way culture is. It does not seem to make sense sometimes, and trying to do business here often feels more like gambling than strategic planning.
If you were beginning to wonder what any of this has to do with business, we have to return to the market research needed to formulate a realistic business plan. I think this is the point in the process where the experience of others is absolutely essential.
Know your market. The initial market research may be done by a Chinese firm, but give it to some other Chinese or many expert expats that you think understand the situation. See if the research seems to contain realistic and balanced results. My own ventures in China have never been in a vacuum. I asked for the opinions of a lot of people: business people much more exprienced that me, Chinese friends, Chinese business people.
And back to a question above, how is it some people do not seem to write a business plan but can conduct very successful business? For one, they may have done it so many times, they have already gone through the steps in their heads. If, however, so many businesses fail, why not give yourself the best chance possible to not add to those statistics?
