- How to crack the Chinese market.
The top five challenges of doing business in China.
(techno music)
Now, there are many, many challenges
of doing business in China.
A lot of people want to get into the Chinese market.
But, what are some of the things that you have
to watch out for?
That's what we're going to talk about today.
So, language, culture, localization, what else?
What are some of the other challenges?
- I'd say definitely government regulations.
- Government regulations.
- How to pass the government law and
how to actually proper sell your product in China.
That's very, very important.
- Yeah, yeah, and this requires a lot of paperwork
and also requires that you have the right relationship.
You've got to know the right people.
Example, I'll give you an example.
Even my uncles and cousins
are doing business in China,
that they know the top guys,
in what everybody want to do within in the government right?
That's okay, they get stuff passed and stuff.
But there's a couple of the smaller guys,
that they're not happy, right?
So they're not part of it,
and they are not getting benefits.
Just a couple smaller guys,
they can screw up the whole deal.
They can give you a very, very hard time.
Very hard time,
because they are the ones that are at the ground level
so that becomes a problem.
Or, as little as this division, this part of
government says yes, but you need to be able to
work with this and this says no, and the
government paperwork with this,
definitely becomes very, very challenging.
Even for Chinese, to get some simple stuff done.
Like getting a sort of license or that kind of stuff.
- Yeah. - It's very, very challenging.
- I would say, don't underestimate anyone
in the government, in power.
- Oh yes. Don't feel, I'm dealing with the top guys,
they're my buddies, and then screw the little guys.
The little guys, they can destroy you.
They could absolutely destroy you.
- Governmental relations, definitely important.
You look at Mark Zuckerberg.
Obviously, everyone knows Facebook's been
blocked out of China, among many other tech companies.
And, that doesn't stop him from learning Chinese,
going to China regularly to talk to the officials,
and continually building that relationship,
hoping that one day, Facebook would be available in China.
- Yeah, because Facebook at this point,
there isn't anything
maybe, (speaks softly) but at this point.
- Yeah, and I don't think (speaks softly) really active now.
- Yeah, so Facebook still has an opportunity,
and Mark is smart, he knows that in order to
enter the market, crack the Chinese market,
you need to speak the language,
so Mandarin, I think he's sending his kids
to learn Mandarin too, I believe, right?
- Yes.
- Yeah, so that's big as well.
- You know he had a meeting with the president?
- Yeah, yeah, so that's good to develop those relationships.
But definitely from all, top to bottom,
those relationships you got to have.
What I notice is, is not, in North America,
okay, here's a big difference,
in North America,
relationship is important,
but if you have a strong enough ability,
you could get away with lacking some relationship.
For example, if you're very good at what you do,
world class expert at your thing, in your field,
people will seek you out,
and you could get away with a lot of stuff.
China, it doesn't matter how good you are.
You can be the number one person in that,
you don't have the relationships, nothing gets done.
Nothing gets moved, you can't do anything.
If you maybe have average ability,
but you have some outstanding relationships,
things get done,
and that's how people make so much money,
with no skills, no abilities,
just with the right relationship,
the right whatever, they secure
some rights to sell something, in that city,
and it becomes a monopoly,
it's like a license to print money, right?
So it's little bit of that,
that's what I noticed here.
What's the last challenge?
- Proprietary.
- Proprietary, yes.
- So what we mean by that is, you look at Uber,
who actually was able to get into China.
- They got in, yeah.
- They got in, actually one of the first few,
but eventually they left,
or got bought out by DiDi,
who is right now the biggest--
- Kind of like the Uber in China, yeah.
- The Uber of China,
and when you have a product or service
that's not proprietary,
then you're lacking the other four elements
that we talked about.
You're lacking the localization,
you're lacking the language,
you're lacking all of those things...
- And without the government's protecting you.
- Yeah, lacking those relationships,
then it's a very hard uphill battle
and it's easy for the local company to say,
hey, I've got those relationships,
I'm going to move 10 times faster than you,
I also understand the market,
let me get everybody in, and just kind of
overtake that market
a lot quicker than Uber was able to do.
So unfortunately they weren't able
to create an anchor in the China market,
but that happens to a lot of other businesses too,
where maybe they can go in, but--
- They don't stay in.
- Exactly, very slowly they lose their shares,
and eventually they're booted out.
- Being knocked out by some Chinese company.
- And also, yeah, it goes back to the government
relationship, right,
there's a lot of stuff that they could do,
and unfortunately in China,
the whole copyright,
and they knock off your stuff so fast.
You've got something working,
they're copying it, they're duplicating,
so it's not so much, in North America,
you have an innovative idea,
that you've got a great team,
you've got capital, I can make it work.
China's not like that.
Doesn't matter you've got a great team,
doesn't matter you've got a great product,
they can knock it out so fast,
I don't care what technology,
what other invention that you've got,
they can knock it off.
And then they can maybe talk to their friends
in government and make sure that you don't get in,
or to kick you out,
so there's nothing you can do,
and when it comes to money,
they can also get money.
And money, just money out of it itself
doesn't get stuff done, that's what I noticed.
Here, yeah, you can hire people, but it's not like that.
So relationship becomes so, so critical.
- Actually I do have a very strong story about this.
Actually there is a very big
sunscreen lotion in Japan.
It's from (speaks Japanese) that big, big company.
It has one line, just selling to,
just maybe focus on sunscreen lotion for women.
And then that brand, they have translating into Chinese,
which has been popular for the past five or six years.
- Very popular, they're selling it, they're online.
- It's called, I'm not 100 percent sure the English name,
I think it's Anessa,
but then the Chinese name is (speaks Chinese)
and then that brand's got really popular,
and people just start talk about (speaks Chinese)
which means, oh, I can just get this brand right?
But then turns out, they didn't trademark in China.
So a Chinese company trademarked that Chinese name
in China, which is that brand cannot sell in China
with that name.
- They've been selling for five years,
they cannot sell the name anymore, right?
They got to come up with some other name.
So when you search online,
you can't buy it online anymore,
even though, owned by big company, a big division.
Like some of these, like the littlest,
the dumbest mistakes that they could make,
they can't see that.
Like this kind of stuff you gotta protect all the way.
Even look at Trump.
Trump does not own a trademark in China.
It's owned by some other dude, right?
Trump, as big as the freaking president,
you can't do anything.
They're like, screw you, you can't do anything.
He doesn't own his trademark.
So imagine if he's putting up a building in China,
he can't call it Trump.
- Whoa.
- It's like the craziest thing.
- And it doesn't matter how big or small you are.
You look at the small level, you look at Kickstarter,
some of the really smart Chinese manufacturers,
you can say smart, you can say a little bit underhanded,
but they regularly go on Kickstarter,
they look at what projects have traction.
Guess what?
They're going to start manufacturing right away.
They have their prototype,
because they share it with their people
that fund their projects,
and really a lot of people have made a lot of money
selling the products before the Kickstarter
initial project was even launched.
Officially, like--
- [Man] Yeah, so, because you may not like it,
you may be like, oh, that's unethical,
or that's I don't agree the way that they do things.
I don't agree either,
but there's something to be learned from that.
The speed that they can knock off a product
and create something better,
by the time you kickstart a campaign,
you are running it, you're trying to raise money,
so you raise enough money to create a prototype,
so many layers.
But in China they can do it so fast.
By the time you're thinking
I'm going to raise enough money to make a white collar
version of this,
they're already making it in China
in 10 different colors,
by the time you have a prototype
they're already selling.
They might even be selling back to US.
Then how are you gonna compete, right?
- And then which, I could everyone another suggestion,
is before you bring any product to China,
you got to be really careful,
because for Chinese investors,
they're probably thinking,
can I knock this off easily in China?
And I don't have to do an ownership with you?
So you have to be very careful about that.
- And finding the partner you can trust,
and they'll tell you a good story, right?
Oh yeah, we can sell a gazillion of these in China
for you, we've got distribution,
I've got the relationship.
- [Woman] Yeah, just without you.
- Just without you, that's what they're thinking.
They want to get all your stuff,
and then just sell it on their own.
So a partner that you can trust,
and also a partner that you know that,
you're the proprietary, you're protected,
maybe you own a trademark,
also owning a trademark in China,
just protect yourself in any way possible.
I think that's the most important.
So that's how you crack the Chinese market.
Those are the top five challenges.
So think about those when you enter the market,
and just be very, very cautious.
When there's big money,
obviously there's big risk.
Also big opportunity,
but you got to pay attention to details,
find someone you can trust,
hire a professional,
just do your due diligence,
and investigation before you go into it
and spend a lot of money, okay?
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