Mechelen Mechelen 3 september 20143 september 2014

ChinaExperiences in

Defining & Conqueringthe Dragon

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Who am I ?Ilse Hermans

SinologistSales Director

Business DeveloperChina Veteran

Ilse Hermans

My China Experience

Telindus (network integration--currently part of Belgacom)

-set up Representative Office in Beijing for networking, build brandname, market research etc.

- bought HK distributor & became WFOE with 8 offices - in strategic locations in China

chemicals & nylon polymers

polypropylene

Fibres & yarns

fibres carpet yarns

Residential

Commercial

Offices

Industrial

Floor coverings

cushion floorhome tiles

tufted carpetnon woven

contract tilessports

DOMO CHEMICALS DOMO INDUSTRIES DOMO REAL ESTATE

-set up Representative Office in Shanghai

-Sales and Business Dev. entire Asia

-Managed Sales Offices in Hong Kong and Shanghai

-Sales and Business Development entire Asia+ Australia and NZ

-JV manufacturing plant Nansha—Guangzhou

-bought out JV partner to establish WFOE in Dongguan-Guangdong

E. Mannequins Bonami

-Crisis Mgmt

-construction plant in Qingyuan

-operations and plant in Guangzhou

-new plant in Dongguan

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A forewarned man

is a forearmed man

--or what experienced thought me

中国

"The Chinese have been doing business in a certain manner for thousands of years. Don't

even start to think for a millisecond that you're going to change it."

Most hated exclamations from HQ to China expat MGR:

-This is not logical

-Common sense dictates that…

-If it is possible in Belgium then why not in China?

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Most hated exclamations from Chinese Partner/Client/Supplier to China expat MGR:

-You do not understand since you are not Chinese

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Most hated exclamations from Chinese Partner/Client/Supplier to China expat MGR:

-You treat/look down on China as a third world country-You do not respect China

Doing Business in China—6 tips

1. Listen more, talk less!

1. Listen more, talk less!

Do your homework and do it in the field

1. Listen more, talk less!

How big is your market really?

• China population 1,3 billion = 1.000 Mio. Rural + 300 Mio. Urban

Financial situation + development conditions reduce RURAL market to ca. NIHIL

Today’s residential market potential for DOMESTIC mfg. thus equals 300 Mio potential users

HOWEVERFor FOREIGN mfg, the market potential = only

50 Mio users – more expensive imported product only sold in Beijing, Shanghai, Guangzhou, Shenzhen, …

Example 2B Delighted-- Market – Consumer Analysis

Market Diversity per Geographic Region-our target market (5-10% of total region)

Market Diversity per Geographic Region(-90%-95% of total region can not afford our products)

Market Diversity per Geographic Region-Our target market owns or is thinking about owning this-Image is most important

Market Diversity per Geographic Region-largest part of the region owns this however.

Do not discount TASTE to determine the market

China 5 year plan vs your business plan

China 5 year plan vs your business plan

- Three of the main priorities in this plan are sustainable growth, industrial upgrading and the promotion of domestic consumption. These priorities explain why certain sectors, including energy, automotive, IT infrastructure and biotechnology also receive a high degree of focus

2. Prepare your pitch properly

A lot is about perception and looks

A Lot is about Brandname IMAGE and Bragging Rights

Be a luxury item-(perceived to be) worth the price

Quality vs discount

(or quality-price perception)

3. Bring/use your OWN professional translator

3. Bring/use your OWN professional translator

3. Bring/use your OWN professional translator

3. Bring/use your OWN professional translator

3. Bring/use your OWN professional translator

3. Bring/use your OWN professional translator

3. Bring/use your OWN professional translator

4. China is not one market

56 recognized ethnic groups

4. China is not one market

4. China is not one market292 living languages and numerous dialects

5. Focus on building relationships, not

contracts

5. Focus on building relationships, not

contracts

5. Focus on building relationships

- Chinese superstitions and etiquette

5. Focus on building relationshipsUnderstand their superstitions to understand them

5. Focus on building relationships

5. Focus on building relationshipsUnderstand their superstitions to understand them

5. Focus on building relationshipsUnderstand their superstitions to understand them

5. Focus on building relationships, not contracts

Perform your due diligence 100 times more thorough than you would in Europe.

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5. Focus on building relationships, not

contracts

Perform your Due Diligence 100 more thorough than you would in Europe.

5. Focus on building relationships, not

contracts

The Contract Is Signed. And Now the Negotiation Begins.

5. Focus on building relationships, not

contracts

The Contract Is Signed. And Now the Negotiation Begins.

Same bed, different dreams

5. Focus on building relationships, not

contracts

The Contract Is Signed. And Now the Negotiation Begins.

Same bed, different dreams

6. Send your best people

Some realities, challenges

and hurdles

Human Resources:

Management:

- If you go to China expecting a

deal, you'll be sorely disappointed

Human Resources:

Workers:

-China is becoming more expensive

-Complicated Labour laws

-High Soc. Security

-High expectations

workers

China Legal System:

There's the written laws in China and

then there's the reality on the ground

China Legal System: There's the written laws in China and

then there's the reality on the ground

Every District in every province

has a certain autonomy and

different process and priority.

Location, Location, Location:

-Developed vs cheaper

-1 in a million vs unique

Location, Location, Location:

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China Legal System:

Copyright or the right to copy?

China Legal System:

Copyright or the right to copy?

Questions?

谢谢