China Is the Number 1 Economy; What Are You Doing About it?

Michael MicheliniBlog, Business, Case Studies0 Comments

I came to China in 2007 and I had no idea I’d still be here in 2015! I initially came to deal with sourcing products from China for my e-commerce business, and maybe dabble or experiment with selling in China. I remember people joking with me that Chinese had no money and not to waste my time with it – and this was from Chinese people themselves! How quickly things change.
We now see the Chinese consumer as a driving force globally, and still I feel so many Westerners like me are completely confused about how to tap into this opportunity. Today I am going to brainstorm a bit and hopefully inspire some of you to take action or at least change your perspective and attitude.
We have already outsourced much of our manufacturing and sent tons of our IP to China; it’s too late to look back – I saw it happening in 1999 when I was working in a machine shop in my hometown. I remember an engineer, Alex, at Barridon Aircraft, where I was working part time while in high school, and he explained that competitors were emailing their CAD files to China and India and getting the work returned the next day. He said he’d be out of a job soon. And sadly, he was right – he was laid off a few months later. The damage has been done, and now China (and other parts of Asia) has the money and it’s time to think about today. I feel many people are furious when I read Facebook and blog comments on certain posts; let’s just come to grips with reality and not just be frozen and hope that these jobs will just magically reappear in America.

China’s Force Is Still Growing

Since I came to China, I have had friends in the USA tell me that I need to be careful, that the China bubble is going to pop. I witnessed a small hiccup in real estate prices in 2008 here and then have seen it surge back – I always wish I got into real estate, as I see that increasing like crazy wherever I go.
But China is like a force that has not yet stopped. Sure, maybe things are slowing down, but the Chinese people are still working as hard as ever. The Beijing Olympics in 2008 was when I really witnessed how proud Chinese are and how they feel they need to prove themselves to the rest of the world. It was almost to make up for some of the setbacks it had in its past (let’s not get political on the blog), and now the Chinese people have to catch up and surpass the rest of the world.
Construction is still nonstop, and those farmers-turned-construction-workers are building for their salary and for their children and grandchildren, but I also believe they are working hard because they want to contribute to the success of the Chinese economy. I imagine my grandfather in New York building skyscrapers with a similar mindset, and I feel that everywhere around me.
I know there are critics who will say real estate and new construction in China will slow down and crash. It is slowing for sure, but I still believe the people here will continue to show an extreme work ethic and patriotism that will propel the economy further. This passion impresses me.

Should You Drop Everything and Move to China?

Let’s say you’re excited to tap into this amazing opportunity and move to China today. I did it for different reasons before, but today I am seeing young entrepreneurs do it for the reason to sell to the Chinese and tap their spending power. This is an extremely difficult feat, and I would say you may be better off doing business with the Chinese in your home country! Chinese are coming to Western markets in droves and they need help there.
If you are still set on coming to China, I would really advise to take 4 to 6 years soaking things in, trying things on a small scale, and learning constantly. It isn’t something that can be done quickly, and I know how impatient most of us are (myself included, but I’m getting better). If you want to establish a big business fast, sell to Chinese in your own country. Selling to Chinese on their own turf is something that will take brand building and trust building for quite a while, and I know most of us don’t have the patience for that. Build relationships, experience, and trust, also known as guanxi (I’m not a fan of this word, but basically let’s call it relationships). And learning the Chinese language is necessary – I’m lucky I have made it so far with my limited Chinese skills, but I’m now actively working harder on it.
This is why a lot of my Chinese friends like selling to foreigners / Westerners – we are much more willing to trust and make a purchase than a Chinese person.

Why “New Chinese” in Shenzhen Succeeded

I have quite a few successful Chinese business friends in Shenzhen, and they tell me the reason they were able to succeed in growing their Chinese customer base is because they relocated to Shenzhen when it was growing. They said no one knew anyone else – the city didn’t have locals; everyone was an immigrant – and that when someone needed a product or service, they would be forced to do business with strangers as they were in a new environment.
Compare this to how these same Chinese would make purchasing decisions in their hometown – they would ask their friends for a recommendation, and then this guanxi term pops up with doing business.

Why Chinese Don’t Trust Easily

I am not a China history expert, but I will explain some of what I have learned over the years. Because there is such a large population, there are a lot of choices when buying a product or service, so that is one reason a Chinese consumer would ask a friend rather than sift through all the choices. But on another level is that when “this China force was unleashed,” as I mentioned in the earlier section, many Chinese took this opportunity as a way to get rich quick at the expense of others. Other deeply-rooted concepts were that the general feeling of lack of resources / food creates that concept that you need to “fight for yourself and your loved ones” as there may not be enough resources for everyone in the town.
Each one of these points is a book in itself, and I am just sparking some ideas and hopefully giving you more perspective when you feel Chinese don’t trust easily and may be rude or aggressive sometimes in business. And I hope this doesn’t offend my Chinese friends; I believe they would agree with me.

Tap into the Chinese Coming to You

Chinese want to travel and explore all these countries they haven’t been to. And this is a good opportunity because they may not have enough friends and trusted people to get the products or services they need there. Something I still haven’t seen happening is for businesses to put a Chinese translation on their website. Even if you don’t plan to sell directly to China, Chinese people are in the USA, Europe, and other countries searching in Chinese! They aren’t searching in English in America; they are searching for products or services in your hometown in the Chinese language.
This is the screaming opportunity I have been seeing for years now, and I hope more people implement it. You don’t need to target Chinese in China – you target Chinese in your home country, in the Chinese language.
Yes, you will need to invest some time and money in translation; that isn’t free and will require some preparation.

Some Business Opportunity Ideas

Basically, I am thinking of any “normal” business in your hometown except that you cater to the Chinese community in the area. If you own a business already, then simply adding a Chinese-language option is a great improvement. If you really want to go above and beyond, get a Tencent WeChat account and have that synced on your mobile phone (for a start it would be a personal account; later you can upgrade to a company). Just show that on your marketing material (in English, too) but especially on your Chinese-language info.
Here are some ideas; they may already be overdone but may spark your creativity:

  • Helping Chinese relocate to your city – I am not going to put selling real estate to rich Chinese on this list as I hear about it all the time, but another service that may need some special attention is to help these new Chinese moving to the USA with transitioning to the local community. Maybe the real estate company offers this, but I am sure it is nowhere near the amount of help and service really required. You could make a service package with some English training, slang, local etiquette, cultural differences, making friends in the area, and just overall “getting them into the circle of friends” in the town. You would make a special Chinese and English website and target it to the city you live in. Maybe this could go big and be a service everywhere.
  • Children Assistance – I think it is especially hard for a Chinese student coming to America. They don’t fit in to the classroom and they are super shy. If you can, make something similar to the above except catered for the kids.
  • Sell Franchise Opportunities – Chinese are hard workers and always looking for business opportunities. You may target specifically these Chinese who have funds to move to America, and offer them some franchises. We all see the Chinese fast-food chains in our cities, but maybe you can offer them something different. Just helping to localize these offerings to them and package it in a way they are comfortable with can become a big hit.
  • Group Travel in the Area – Chinese like to travel as a group; I think it’s because the way packages are sold in China and it has become the custom. In the USA, the Chinese in the area may be able to coordinate a group trip themselves, but I think they would be excited if a local in the area created some travel packages for a weekend trip or even a day trip. Get them to pay up front, as a package, and also have it translated into Chinese. They would learn about some new sightseeing places in the area and you can have a new business. I would just suggest that the trip be well scheduled; I have done some events and in my experience Chinese like to have an hour-by-hour schedule of where they are going and what they are going to do, leaving no room for their own choices. This is the critical part; they want a local person to have the day “ready to go” and they follow the plan.
  • Summer Camp – My friends in China are hearing about the American summer camps and getting excited. They see it as a great way to have their kids learn English as well as get cultural exposure to Westerners. But the summer camps don’t really know how to deal with these Chinese campers. You can cooperate with the summer camp and make the process smoother – you’d probably need to add some services on top of the actual summer camp program, do a bit more hand holding, and “put out fires” when some language and cultural mishaps happen. Education for Chinese is one of the most important things, and money is not the issue – it’s the quality.

There Are Chinese Already Selling These Services

You may be saying to yourself, “Well, there are already Chinese in the neighborhood and they have services like these. So how would I be able to get these customers?” The big advantage we have is that we are Westerners, and many times Chinese trust a local in the area more than a Chinese person, or they may feel your knowledge and experience in America is better. We are on the home turf.
Leverage that you are an expert in the area and your expertise for your service. Show that you have worked with Chinese clients before; have testimonials, and even have previous clients come in for meetings or sales seminars. Trust is the most critical quality, but also showing you have expertise and experience dealing with other Chinese in the past is a huge advantage.
However, don’t look like you only work with Chinese; also sell your service to the “regular” English-speaking market, even if it isn’t your target market. I think it is human nature, but especially in my experience with Chinese they will want to verify that locals / Westerners also use or buy this service. That is one reason foreign luxury products sell so well; Westerners also buy and use these products, so they must be good. Make sure to have product material for locals as well.

Embrace, Don’t Resist

Selling to a Chinese customer is a different experience than selling to Americans, and you need to embrace it and not resist or force things to work like you are used to. That is the biggest lesson I have learned in China; I need to embrace and not resist it. Don’t expect to change Chinese ways, just like you shouldn’t expect to change anyone’s ways.
Take notes as you experience different sales experiences with a Chinese buyer. Write it down, learn, and improve just like building a new product or service. And you may need to change your product or service if you’re already selling it to Americans so that it fits the format a Chinese buyer wants.
Some examples of this:

  • Chinese hate monthly service charges – When I have sold internet marketing packages, if I made it a monthly fee, they would wonder why it is monthly and for how long they would need to pay. I changed my offer to make it a six-month or one-year package with a payment every few months and a result at the end. This was much better as it was a “product” and not an open-ended “never-ending” monthly service charge they would have to pay.
  • Freemium but locked in – Just paying for a service isn’t enough; the way I see services sold in China is that they are free to start but they make you invest with your time or data to get onto the platform. I don’t know many services that make it easy to “port” your data from one service provider to another; there isn’t that open data exchange that you see with Western internet companies. Therefore, a user doesn’t want to be bothered re-entering all their information again on a new service, and you got them locked in. I know this is a bit shady and not a good, open practice, but it is accepted in the market from my experience. In your offering, offer a free or low-cost option that locks them in by investing their time on your product.
  • Strongly encourage social sharing – Social sharing is powerful anywhere in the world, but I would say it is even more powerful in Chinese social media. Throughout this article I have explained how Chinese don’t trust easily and tend to buy from friends, and this has transferred into the social media world. If a friend sees another friend sharing / endorsing a product on social media, they are much more likely to buy this service. My WeChat moments is full of social sharing and it seems like a wall full of advertisements – which is so annoying for me – but I have accepted it as the Chinese way of doing business.

Just a couple points. But like anything in business and life, test and adapt.

Make Attempts to Learn Chinese Language and Culture

I have been committing more this year to learning Chinese. But, even before this year I would pick it up a little bit and try to speak as much as I could. Doing this to a Chinese person shows a lot of respect, and they are always amazed, even more so when I am back visiting America – I’ll see some Chinese tourists taking a photo and will join the conversation and they’ll be in such shock!
Even though more and more Westerners are speaking Chinese each year, it is still a “shell shock” for a Chinese person to see your attempts, and they are easily impressed. If you are trying to attract Chinese customers to your business, making even the smallest effort to know a few words will help a lot.
On another note, it is worse if you make an attempt and instead speak some Japanese! I saw an article online that was so embarrassing to me as an American, a high level government official in the USA was greeting a Chinese executive and he spoke some Japanese to them. Really, that is not acceptable. China is a massive global economy and, especially for a government official, they should take five minutes to learn some Chinese greetings, at least Ni Hao!
I made a similar mistake when I was back in New York City a few years ago, I had a bit of jet lag and woke up early, so I went to the corner store to buy a drink. The cashier was Asian, and I mistook her for Chinese when she was actually Korean! I greeted her with Zao Shang Hao (Good Morning) and she quickly interjected with “I am Korean, not Chinese!” A little embarrassing for me, but at least I made an effort. So, make sure what nationality the person is before practicing your Chinese.
If you have a local business, you may have Spanish-language signs and menus, but why not also make some Chinese signs and menus? I could imagine how shocked a Chinese customer would be if they were in an American establishment and the waitress or shop owner greeted them with Chinese and then had a localized Chinese menu or guide for them. I am sure they would remember that, take photos of the place and share it on Chinese social media.
Who knows, maybe in 5 to 10 years everyone will have Chinese-speaking staff and signs throughout the USA, but may as well get ahead of the curve!

Conclusion – Think Globally

I think the main takeaway is that we live in a global economy now. In America, the Spanish language has slowly “crept” into society over the past few decades. Now, I truly think it is time for Chinese to do the same as well. And while the government may not force it, it is a competitive advantage for you as a business owner and entrepreneur to embrace it!
I’m a little nervous posting this online to get some close-minded people shouting about it. But the “writing is on the wall” – China is a massive economy with a global impact – and we need to take advantage of it or be left behind.
Would love to hear your comments and feedback below!

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Tags: china, entrepreneur

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