Though the growing Chinese consumer market has highlighted a huge growth opportunity for western companies, the Chinese business ecosystem is very challenging and complex, so if you don't know how to take your first business step into China, you should have an experienced consulting company by your side. If you enter without much prior knowledge, true success is really the exception not the norm. On one hand, you have many tech giants such as Facebook, YouTube, Google and WhatsApp failing in the Chinese market, on the other hand, you have their Chinese counterparts, such as WeChat, that are doing amazingly well and are clearly dominating the market in China. Besides, a new trend has taken place: China was once notorious for copycats, but now more and more innovation are coming out of China and are influencing the rest of the world.
So how do you know if you're ready to operate in China?
1) Establish your Presence. You shouldn't enter China if you merely want to test the waters. You won't be taken seriously. One of the indicators that Chinese look for is if you have offices in China, or you can be "here one day and gone the next". Hence, one of the best practices for launching in China is to have a proper local presence. If you're not seen to be serious, you will lose face, and you won't get a second chance to make a first impression. (See how ChinaLegalExpress can help you establish local presence in China)
2) Secure a valid business model. What works outside of China may not function in China, so make sure your business model has been examined and tested in China, especially on compliance issues. Also, it is critical that your business model includes a plan for generating revenues that you can scale. And it's preferred if you can generate those revenues before committing to China operations. To achieve those objectives, make sure that you have real Chinese partners. Without the right partner, you won't know if you really have a valid business model in China. (See how ChinaLegalExpress can become your partner in China to help you with establish a flexible, adaptive business model)
3) Be VERY aware of IP risks. Though Chinese government has been enforcing IP laws, those laws are often in favor of domestic players. Therefore, your assumption should be that if you can be copied, you will. So if your business is IP-sensitive and you're not willing to take the risk, then you should take precautionary measures before you enter the market. Generally, you have two options: one is designing a thorough China IP strategy by working with the best Chinese IP lawyers; or you can find the right partners in China, which are often the "big boys". Both approaches can lower your risk of getting copied by other companies. (See how ChinaLegalExpress can protect your IP with its legal expertise, and how our domestic network can bridge you to your right Chinese partner)
4) Acquire effective partners. It's very beneficial that you partner with the big boys, learn from their practices, and take advantage of their domestic connections. Also, having real partnerships with big local companies can help you gain credibility with other local companies that you might eventually work with.
5) Employ locals. You must hire local employees, period. The team has to be built upon local talents who are good, who can be trained, and who are the right fit for your company. Finding such high quality people can be very difficult, so you have to invest necessary time and resources. (See how ChinaLegalExpress can help you acquire the right talent to build your human capital in China)