Doing business in China

The number of Western businesses searching for a new home is continually growing. There are many different reasons they are leaving. Many end up going to China, thinking business is much easier there. But the rules that apply are different than those in the West and they are consistent, according to a man who has been doing business for 25 years in the People's Republic.

Due to high production costs, Manfred Grundt of NaimexTraiders, a German company that produces natural sausage casing, moved his production facilities to China over 20 years ago.

There, he employs over 800 people who work to produce the casing of Germany's national food, the bratwurst.

Self experience

The numbers speak loudly and clearly; if Manfred Grundt were to still produce his sausage casing in Germany, he would have to pay a monthly average of 4,500 euros (6,000 dollars) for each employee. In China it is only 595 euros (800 dollars), and this is still considered a well-paid job in China.

What started out as a small project in the 1970s became a joint venture in 1986. And back then, neither Germany nor the European Community offered diplomatic nor financial support. Manfred Grundt was a pioneer in his field. And nobody knows better than him what it takes to do business in China.

"Those who have patience, and who invest time and create friendships are the ones who are successful," says the German business man. "One thing is for sure in the People's Republic of China: the Chinese are proud business people."

When in China...

When doing business it is also important not to "lose face", neither your own, nor cause someone else to "lose" theirs. This is one very important custom in the Land of the Dragon. And only people who truly respect the customs of the Chinese partners' culture will really be able to make money.

Aside from being extremely polite, eating out with business partners is also very important. "Those who fail to establish a network of business contacts will not be successful in China," Grundt warns. "I am not talking about bribery, but simply about meetings with food and drinks. To this day we meet with the veterinary authority each quarter and with customs because we have known each other for so long. Some of the veterinarians from back then are ministers in Beijing now."

Long road to success

But it is a long and sometimes difficult road to this kind of success. Networking, trust and friendships take time. You need a great amount of patience, a foreign concept for most German companies. Manfred Grundt tells medium-sized business owners: "if you take the bureaucratic road, don't expect to get anything done in less than two years. Whoever thinks they will be making great business deals in China in less than two years is going to lose."

These principles don't only apply to Western entrepreneurs. The same goes for politicians. They have also had to go through the same difficult learning process. Grundt thinks they have started taking the right approach in the last five years. Had Grundt not learned this lesson over 20 years ago, he says he probably wouldn't be where he is today. He also says at least 80 percent of companies in his branch wouldn't exist today if it weren't for China.

Author: Frank Gazon / sb
Editor: Grahame Lucas