HOW TO MAKE BUSINESS IN CHINA?
Still not many, just 600, but every little bit is attached any more. They are the Spanish companies that have decided to go to China and have local presence in a country that is moving from factory to market in the world, low-cost producer of giant consumer products and services. Break into this market represents an opportunity that no company wants to miss, but few know how to deal. Is the challenge for 2011 of many managers of small and large Spanish companies, successfully landing on the second economy in the world.
Those who have already tried to match, is a complex as it seems, as vast as his figures. While the euro-zone GDP grew 1.7% last year, China's 10.5% did, according to the IMF. The country receives more than 10% of all FDI in the world and poses a potential market of 1,300 million consumers. The PwC estimates that it will become the world's largest economy by 2018, ahead of the U.S.. In 2050 its GDP on purchasing power parity is nearly 20 times that of Spain, who fall to No. 18 world ranking.
"When you get here is to wear sunglasses, everything shines." He describes José Luis Gasco, Indra's director in China, the boiling situation in the country. The technology is one of the few large Spanish companies there. The other cases are known: BBVA, Abengoa, Mango, Gamesa, Technical Gathered ... Gasco has nine years as head of Indra operations in China, which employs 80 people, mostly local, and his first advice is clear: "You have to differentiate yourself in something, find niches in this country still needs you. Competition is fierce and it makes no sense to come to come. If you do not offer something different, forget it, "said from Beijing.
Land with the right strategy is the first step and perhaps the most complex. "It's the million dollar question, if you come alone, if allied with a local partner ... there is no single answer. It depends on the regulatory framework," says Francisco Soler, head of the Shanghai office of Garrigues. The Spanish firm of attorneys has been in Asia since 2005 and, unlike Indra, which carries 90% of their work for local clients, Garrigues mainly advises foreign companies on how to settle there. "We now have 26 attorneys, four Spanish and the rest Chinese," says Soler.
Strategic sectors such as financial services, telecommunications, energy, chemical, steel and metal industries are heavily regulated by the Government, which requires a minimum percentage of participation of a local partner. It is therefore essential homework before you arrive: to study the legal system, which sectors are tax incentives (such as those related to technology and R & D) and what not, and what geographical areas are most appropriate, steps in the formation of the company ... This previous research point to the best strategy to land.
On the ground everything is different, starting with how to understand the business. "Chinese managers tend not to trust anyone outside their immediate environment, they are opportunists. So to create bonds of friendship with potential customers is an important prerequisite. In the West a business relationship may give rise to a personal friendship. In China is just the opposite, "said Michael Witt, a professor at INSEAD, specializing in business and management in Asia. This idiosyncrasy makes negotiation times are much longer than in Europe and Chinese companies more hierarchical. "It's a cliché, but it is real: the weather here runs at another speed, be patient" agrees Gascó.
Nobody knows these key Chinese employees themselves. Hence the importance of recruiting qualified local talent, another major obstacle. "This must be the first sword of the company at management level, but are Chinese workers who must carry the day. It is crucial to trust people who work here," says Pedro Conesa from Shanghai InterChina partner, consultant advising Spanish companies arrived in the country.
The local competition for certain profiles, such as engineers, business and marketing executives with knowledge of English and international experience, has pushed up salaries and the level of rotation. To retain, Conesa advised to involve them in the company, management and, above all, pay them well. "The wage issue is more important here than in the West," he says. Still, unskilled workers paid 80% or 85% less than in Europe means charges by between 25% and 30% less.
For SMEs, the majority of Spanish companies settled in China today, the key is to hire sales representatives solid and reliable. With a differentiated product or service and the right people, business opportunities are almost endless. "In three years and generate 25% of our sales there, with peaks of up to 40%. And all local customers," said Ramón Martínez, director of strategy Stimula, a small design company with five people in Spain and one in China will soon open a permanent office in Canton. Specializing in design of lighting and electronic equipment, and helped by the ICEX, works for a dozen Chinese clients, including AD Lighting, one of the leading manufacturers in the country.
Issues such as know how to deal with the bureaucracy and the administration or legal proceedings known to combat the copying of products and corruption are key chapters in the manual of expatriate managers in China. A handbook, according to Francisco Soler, should also include adaptability and open-mindedness. What language? "It is not necessary, but few will get you out of trouble."