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How To Succeed In China Business.

By Dan Harris and Steve Dickinson

Rich Brubaker over at All Roads Lead to China did a post recently, entitled, "5 Characteristics of Successful Companies in China." The post sets out the following five things successful companies do in China: 1. Define their China market. The successful company spends time figuring out what its market will be in China, both geographically and socioeconomically. 2. Develop a "plan of attack" in-house. According to Rich, the first layer of the plan will "focus on company structure (onshore vs. offshore), operations (domestic vs. export), networks (inside sales vs. agents), and commitment (investment vs. outsource), and will create a path for executives to take as the firms begins to grow." 3. Bring in the right people. 4. Leverage successful pilot programs. Successful companies do not roll out a six city platform from day one. 5. Not be afraid to start over. "There are no deals of the century and I have never heard of a case where a souring JV [Joint Venture] agreement was made better by giving the partner more money. China is a place where fortunes are lost far more often than they are won, and for firms who hang on rather than execute a new strategy, lost fortunes are far more likely." One of the things that I love about being a lawyer is that it gives me a birds eye view of a large number of companies and their operations. From my perspective, everything Rich says above is absolutely true, but in some respects, it is even less complicated than he makes it. Admitting hindsight is 20-20, I "feel" as though I am virtually always correct in predicting which of our clients will succeed in China and which will not and those who succeed typically can be described as knowing their business and wanting to do things right in China at the right price from the very beginning, while recognizing that China is not Kansas. Our clients who fail to succeed in China go into China planning to cut corners from day one and, almost invariably, they hire and overpay an unqualified local (see Rich's #4 above) to run their China business with too little monitoring. What do you think?

Full post as published by China Law Blog on December 01, 2009 (boomark / email).