– How to crack the Chinese market.
The top five challenges ofdoing business in China.
(techno music) Now, there are many, many challenges of doing business in China.
A lot of people want to getinto the Chinese market.
But, what are some ofthe things that you have to watch out for? That's what we're goingto talk about today.
So, language, culture,localization, what else? What are some of the other challenges? – I'd say definitelygovernment regulations.
– Government regulations.
– How to pass the government law and how to actually propersell your product in China.
That's very, very important.
– Yeah, yeah, and thisrequires a lot of paperwork and also requires that youhave 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 dowithin in the government right? That's okay, they getstuff 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 onesthat are at the ground level so that becomes a problem.
Or, as little as thisdivision, this part of government says yes, butyou 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 getsome simple stuff done.
Like getting a sort oflicense or that kind of stuff.
– It's very, very challenging.
– I would say, don't underestimate anyone in the government, in power.
– Oh yes.
Don't feel, I'mdealing with the top guys, they're my buddies, andthen 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, amongmany other tech companies.
And, that doesn't stophim from learning Chinese, going to China regularlyto talk to the officials, and continually buildingthat relationship, hoping that one day, Facebookwould 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 (speakssoftly) really active now.
– Yeah, so Facebookstill has an opportunity, and Mark is smart, heknows that in order to enter the market, crackthe 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 ameeting with the president? – Yeah, yeah, so that's goodto develop those relationships.
But definitely from all, top to bottom, those relationships you got to have.
What I notice is, isnot, 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 withlacking some relationship.
For example, if you'revery good at what you do, world class expert atyour thing, in your field, people will seek you out, and you could get awaywith 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 therelationships, nothing gets done.
Nothing gets moved, you can't do anything.
If you maybe have average ability, but you have someoutstanding 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 sellsomething, 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 thatis, you look at Uber, who actually was able to get into China.
– They got in, yeah.
– They got in, actuallyone 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 lackingthe 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 thegovernment's protecting you.
– Yeah, lacking those relationships, then it's a very hard uphill battle and it's easy for thelocal company to say, hey, I've got those relationships, I'm going to move 10times 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 lotof other businesses too, where maybe they can go in, but– – They don't stay in.
– Exactly, very slowlythey lose their shares, and eventually they're booted out.
– Being knocked out bysome Chinese company.
– And also, yeah, it goesback 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 maybetalk to their friends in government and makesure 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 hirepeople, but it's not like that.
So relationship becomes so, so critical.
– Actually I do have a verystrong 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 onsunscreen lotion for women.
And then that brand, theyhave translating into Chinese, which has been popular forthe past five or six years.
– Very popular, they'reselling it, they're online.
– It's called, I'm not 100percent sure the English name, I think it's Anessa, but then the Chinesename is (speaks Chinese) and then that brand's got really popular, and people just start talkabout (speaks Chinese) which means, oh, I canjust get this brand right? But then turns out, theydidn't trademark in China.
So a Chinese companytrademarked that Chinese name in China, which is thatbrand 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 bigcompany, 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 yougotta 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 puttingup a building in China, he can't call it Trump.
– It's like the craziest thing.
– And it doesn't matterhow big or small you are.
You look at the small level,you look at Kickstarter, some of the really smartChinese manufacturers, you can say smart, you cansay a little bit underhanded, but they regularly go on Kickstarter, they look at what projects have traction.
Guess what? They're going to startmanufacturing right away.
They have their prototype, because they share it with their people that fund their projects, and really a lot of peoplehave made a lot of money selling the productsbefore the Kickstarter initial project was even launched.
Officially, like– – [Man] Yeah, so, becauseyou may not like it, you may be like, oh, that's unethical, or that's I don't agree theway that they do things.
I don't agree either, but there's somethingto be learned from that.
The speed that theycan knock off a product and create something better, by the time you kickstart a campaign, you are running it, you'retrying to raise money, so you raise enough moneyto 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 enoughmoney 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 couldeveryone 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 doan 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 agazillion of these in China for you, we've got distribution, I've got the relationship.
– [Woman] Yeah, just without you.
– Just without you, that'swhat 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 crackthe Chinese market.
Those are the top five challenges.
So think about those whenyou 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? If you like this video, comment below.
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