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Business with China: Hawaii Can Succeed in the World's Biggest Marketplace

Be patient, make connections and hold your liquor

(page 2 of 2)



Michael Zhang of Blue Hawaii Lifestyle,
says the Chinese have a very high opinion of Hawaii.
Photo: David Croxford

For Zhang, who has been involved in business in Hawaii and China for more than two decades, success takes more than unique products or services. It also takes guanxi and a smoothly working team knowledgeable about Chinese language and business culture. “Chinese law is not black and white,” he says. “They have a lot of gray area … You have to know the culture, the people, know your legal rights … You have to find the right law firm, public relations firm, marketing people. It’s like a marriage.”

But long before any company sets foot on Chinese soil, it should consult U.S. government agencies for advice and assistance. John Holman’s Honolulu office is an important starting point. He and his federal Commerce Department counterparts in U.S. consulates throughout China can set up meetings, investigate potential partners, provide lists of legal firms or possible distributors vetted by the department. Much of this assistance is free or low cost.

The Hawaii State Department of Business, Economic Development and Tourism can also suggest resources,agencies and programs to help, says Milton Kwock, manager of the department’s business development program. The department has offices in both Beijing and Taipei that will assist Hawaii business, and it also sponsors trade missions.

“When you travel with a state trade mission you have access to places you wouldn’t normally have as a private individual,” says Wimberly’s Berean. “It made me more aware of the marketplace and made decision-makers in China more aware of what our company could do.”

Kwock said one recent China trade mission led to a contract signed on the spot with a Hawaii company that cleans wastewater with special enzymes. The Chinese needed the service and offered land, a vacant factory and cash.

While Hawaii entrepreneurs already have an edge because of the Islands’ long cultural and business ties with China, dating back to the sandalwood trade during the monarchy era, it’s still important to know something as simple as where to sit for dinner or how to present a business card. Kwock’s office offers clues for newcomers.

“Business is done over meals,” says Kwock, “and there’s a lot of drinking. Either you should be able to hold your alcohol or have one of your compatriots be the ‘designated drinker.’ But you still would be expected to drink something.”

China expert and political economist Christopher McNally, a fellow at the East-West Center in Honolulu, agrees. “There’s a certain art of networking within Chinese society ... Eating, drinking are very, very key. One of my colleagues said you need a liver made out of titanium.”

While there are always going to be risks, the secret to success is about knowing how to lessen them while moving with care and patience. That can include getting an insurance policy from the U.S. Export-Import Bank that covers default by foreign companies. Or seeking help from the Western U.S. Agricultural Trade Association, which will pay for half of a company’s marketing expenditures for agricultural products overseas. It may also be wise to start by building your product’s reputation in a smaller, more accessible market.

“We recommend looking at Hong Kong, Singapore or Taiwan before going into China,” says Holman. “China is a very complex market. I don’t recommend it for companies selling internationally for the first time. Sometimes you can find a distributor in Hong Kong who will sell in China. That’s an indirect way of getting in.”

Hong Kong alone sees 18 million mainland Chinese tourists annually, says Kevin Kraft, who heads Tradewinds Global, a Hawaii-based export management company that represents about a dozen Hawaii and Mainland companies.

“A lot of mainland Chinese watch brand development in Hong Kong or Taiwan. They see brands there first and that’s how a trend starts,” says Kraft. “Accessing international markets isn’t impossible,” he continues, “but it takes a commitment and a strategy. Our services really are a great fit for small- to mid-size companies new to export. A lot of companies will go to a trade show, get 50 business cards, exchange e-mails and then lose interest. When you do business overseas, you have to think of it as a partnership with the distributor. Finding distributors isn’t difficult. But going over there, meeting them face-to-face, will always help them be interested in you.”

Building trusting, long-term relationships is something the Chinese prize. That’s the key for Dale Madden, chief executive officer of The Madden Corp. Over 20 years, his company has built a successful business network in China and today manufactures 4,000 Hawaii products in 200 Chinese factories. He has done it with an on-the-ground, hands-on business philosophy that includes hiring China-born managers, researching companies and meeting key Chinese face-to-face.

“I have people in Hong Kong on planes, trains and automobiles all the time. If a new product is being manufactured, a manager will be on a plane and go and approve it and fly back to Hong Kong.”

Now Madden has licensed one of his Chinese manufacturers to use his logo, “Welcome to the Islands,” for a shop selling Hawaii products in Shanghai’s glittering new Pu Dong International Airport.

Although his is a wholesale company, that shop has given Madden a new idea. “We may do a joint venture,” he ponders, “and do a Web site and sell mail-order over there. That’s all new to them.”

Six important How-To’s for doing business in China:

1. Always present your business card with two hands, with the card face up.

2. Make sure your business card is translated into Chinese. Ask someone from China (not Taiwan or Hong Kong) to translate it appropriately. Sometimes the words used in mainland China are subtly different.

3. When you accept a business card, do not put it in your pocket. Look at it, read it and put it on the desk next to you during your meeting. It’s considered rude to put it away immediately or scribble notes on it, as the card is an extension of the person.

4. Since business is often done over meals, and there can be a lot of drinking, be sure someone in your party can hold their liquor. Meals often begin and end with very strong Chinese liquor.

5. Wait until your host gestures where and when you can sit down for dinner. Placement at the table is important and is done according to business rank.

6. Don’t expect a deal to be made after that first meeting. Even if they didn’t say yes, it doesn’t mean no. But even nodding may not mean yes. It could just mean: “I understand you want to make a deal.” Be sure to follow up.

Tips For Success

1. Personal relationships, guanxi, are critical. Get to know people before you do business.

2. Present yourself as an expert in your field and they will come to you.

3. Recognize that China now has its own internal domestic market (the government encourages it). Sell to the Chinese rather than have them make something for you.

4. Travel and meet people today. It will build up relationships for tomorrow. Join trade missions.

5. Sell “Hawaii.” It is already a recognized “brand” in China.

6. Find a partner. You will rarely do it alone.

7. Government can help. Both the U.S. government and the state of Hawaii have experts who can lead you through the Chinese maze, often for free.

8. Start small. Consider China “lite,” such as Taiwan or Hong Kong, to get your feet wet in the market.

 

Hawaii Business magazine invites you to comment on our articles and the issues they raise. Comments are moderated for offensive language, commercial messages and off-topic posts and may be deleted. Some comments may be chosen for inclusion in the magazine on the Feedback page.

Apr 9, 2009 06:14 pm
 Posted by  crafty808

"..manufactures 4,000 Hawaii products in 200 Chinese factories". No wonder all my keychain's and tumblers came apart!

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