Doing business in China: The language is crucial

Despite facing economic headwinds, China is the second-largest economy in the world, boasting an impressive rate of growth. Little wonder that many entrepreneurs have set their sights on China. Opportunities abound there, and the sky’s the limit!

China is home to 1.4 billion people, with a middle-class population of 400 million representing an enormous potential customer base. Apart from this, conducting business in China is important in order to stay abreast of developments in the Chinese market. It is the second-largest economy in the world, with an estimated value in 2022 of USD 17.9 trillion, according to the World Bank. Only the US economy is larger, but Bloomberg News expects China to overtake the US in about 20 years.

Slower growth

But hold on – isn’t the Chinese economy in a slump? In stark contrast to its average annual rate of growth between 1980 and 2019, estimated by the IMF at around 9%, China’s economic growth has slowed to a “mere” 4-5% annually since the Covid-19 pandemic. Europe should be so lucky!

The Chinese economy may be growing at a slightly slower rate now, says Marion Tjin-Tham-Sjin, but China still offers plenty of opportunities for Dutch companies. “For example in agriculture and food, medical technology, healthcare, construction and tourism. We’re also increasingly asked about artificial intelligence, the automotive industry and robotics.”

Four things to avoid when doing business in China

1. Don’t openly criticise a Chinese person. It’s better to be polite and discuss any issues privately later.
2. Don’t imagine that a Chinese person who has studied English outside China is westernised. Even if they speak good English, they are still Chinese and it’s best to bear that in mind in your dealings with them.
3. Don’t let anyone scare you about China or Chinese people. If you prepare well in advance, you can do business there safely.
4. Don’t talk about politically sensitive issues. You run the risk of offending the Chinese.

No “Yes” or “No”

Marion Tjin-Tham-Sjin has a Dutch mother and a Chinese father. She founded Splendid China to assist Dutch companies in the Chinese market. She speaks both Dutch and Chinese and understands both cultures. Translation and interpreting – not only words but also cultural values and customs – is crucial to business success in China, says Tjin-Tham-Sjin. “There are no words for ‘Yes’ and ‘No’ in the Chinese language. So when a Chinese person says ‘Yes’, it has a different value for them than the value we attach to the word. But that doesn’t mean the Chinese are unreliable.”

“It’s important to register intellectual property rights, your brand name”
Marion Tjin-Tham-Sjin, founder of Splendid China

Preparing

The first piece of advice Tjin-Tham-Sjin gives clients looking to enter the Chinese market is to do their market research. “Preparing well is half the battle. Who are your competitors? What legal matters do you need to attend to? Which import procedures do you need to follow? It’s also important to register intellectual property rights, your brand name. If you don’t and you’re successful, you risk someone else registering your brand name and stealing it out from under you.” A common fallacy is that worldwide registration will protect a trademark, says Tjin-Tham-Sjin. “China isn’t covered under that, so trademarks need to be registered separately there.”

“If you can’t speak and read Chinese, you’re basically deaf and blind in China”
Marion Tjin-Tham-Sjin, founder of Splendid China

Intermediary

If all goes well, your market research will produce a list of distributors, potential customers and agents. You can then approach them either directly or, for example, at trade fairs, but Tjin-Tham-Sjin recommends bearing the following in mind: “First, you must be able to communicate in Chinese, because very few Chinese people speak English, and second, you need to negotiate with the actual decision-makers.” Since the Dutch rarely speak Chinese, an intermediary is practically indispensable. “I always say that if you can’t speak and read Chinese, you’re basically deaf and blind in China,” comments Tjin-Tham-Sjin.

Five times more cost-effective business trips with bluebiz

If you fly regularly on business, you should definitely consider becoming a bluebiz member. Bluebiz offers huge benefits:

1. Save on all fronts: each booking with KLM, Air France, Delta Air Lines and/or China Eastern will earn you blue credits, which you can then use to buy tickets or fly in greater comfort.
2. Sustainability: blue credits can also be used to contribute to reforestation projects.
3. Priority: when boarding, Priority and Business Class passengers are allowed to board first. Bluebiz passengers are next. In the event of any flight disruptions, bluebiz passengers are also awarded rebooking priority.
4. Flexibility: as a bluebiz member, you can change the name on a ticket free of charge.
5. Recognition: business travellers with bluebiz bookings are recognised and acknowledged by staff at the airport and on board.

Compliments

Tjin-Tham-Sjin often lays the initial groundwork for clients through her Shanghai office, where she has nine Chinese employees. She herself is located in the Netherlands but she travels to Shanghai several times a year. Splendid China is often called in to grease the wheels between Dutch and Chinese businesses. “It’s not just the language, it’s also about the culture,” says Tjin-Tham-Sjin. “The concept of ‘face’ – personal dignity or prestige – is very important in China. It’s absolutely critical to show that you respect someone, by paying them compliments. Losing face is the very opposite, and that’s why you must never point out a mistake or criticise someone in public. Suppose you arrive at a meeting with your Chinese counterparts and the conference room is decorated with the two countries’ national flags. But instead of the Dutch flag, someone has put out the French flag. If you remark on this, even as a joke, you might as well forget it.” Chinese culture is about harmony, not about being right. “The interests of the group outweigh the interests of the individual.”

WeChat

Before a Chinese person will do business with a Dutch person, they must feel they can trust them. It takes time to build that trust. “The best way to do that is to be on the ground in China,” says Tjin-Tham-Sjin. “That shows you mean business, that you’re in for the long haul. You build trust by having a local presence, for example by opening an office in China or using your intermediary’s office. We ‘lend’ our office in Shanghai to our clients, for example.”

A presence on social media is also important. One important platform is WeChat, a Chinese app used not only to chat but also to buy train and cinema tickets, review restaurants, pay bills and send digital greeting cards, among other things. “A lot of businesses communicate through WeChat, so you need to have both a personal and a business account.”

“Once you’ve gained a foothold in China, the sky’s the limit”
Marion Tjin-Tham-Sjin, founder of Splendid China

Eating out

It’s important to visit China regularly too, of course. Tjin-Tham-Sjin always advises clients not to fill up their schedule on business trips in advance, but to leave room for spontaneous engagements. “Food is very important in China and the Chinese like to invite business contacts out to lunch or dinner so they can get to know them better. That’s one way to build trust. If you don’t leave yourself time for that, you’ll be missing out on opportunities.” In Tjin-Tham-Sjin’s experience, once you’ve been judged as trustworthy you can expect your business relationship to last a long time. “The Dutch and the Chinese are both consummate business people and have a great deal of respect for each other. So once you’ve gained a foothold, the sky’s the limit.”

“Take the time to build a relationship with the Chinese”

Founded in 1936 and located in Noord-Holland, family firm Kaptein produces and packages cheese and butter. Mireille Kaptein has been at the company’s helm since 2009. Under her management, Kaptein has expanded its export business significantly, also embracing China.

“Half our products are marketed in the Netherlands, the other half are sold abroad, with China accounting for a percentage of that, especially our Echte Boter (Real Butter) product. We do business in China with major distributors and importers and they then distribute to the hotel and catering industry, supermarkets and online, for example. This is how our products ultimately reach consumers, especially in the big cities. We’ve been in China for about ten years now, but the pandemic upended everything. Things are a little steadier now.

In terms of starting up exports to a specific country, what’s worked well for us is to showcase our products at major food trade fairs like Anuga in Cologne and Gulfood in Dubai. It’s also important to visit China, of course. That way we can brainstorm with our customers. What do they need? Small-size or large-size packaging? It helps us tailor our product to their wishes. Admittedly, that backfired on us once: we considered translating the text on our packaging – Echte Boter – into Chinese, but they didn’t want that. The Dutch identity is important; it inspires confidence in the product.

It’s crucial to really take the time to build a relationship with the Chinese, to gain their trust. And where you might opt for a more flamboyant sales strategy in other countries, in China you have to emphasise calm, stability and transparency: do what you say and keep your promises. I’m happy to say that this is a good fit for us too, and that’s why we really click.”