Salvador Ordorica is the CEO of The Spanish Group LLC, a first-class international translation service that translates over 90 languages.
In many ways, breaking into the Chinese markets and maintaining compliance within them has become a modern El Dorado for business owners, a land of endless wealth whose treasures are locked behind a jungle that is near impossible to navigate. While countless companies fail to make successful inroads into the world’s most populous country, just enough return keeps our interest forever peaked.
This is not to say that expansion and long-term success in China is impossible. Far from it, but I believe that we do have a habit of mythologizing the wealth to be found in the country without taking a realistic look at the politics and sentiments that affect the viability of our businesses in that environment. Succeeding in China requires more than speaking the language and having a good product. During my time as the CEO of a company that has customers based in China, I’ve discovered that it requires a deep understanding of the culture, politics and perceptions of the region you are entering.
Just as you wouldn’t march off into the jungle without a map, compass or a native guide, you don’t want to invest your time and money into a country you do not fully understand.
While incredibly old, China is not a static culture. Within China, demographics, income levels and spending have all begun to change at increasingly rapid rates. Not only have these changes made the country attractive for Western companies (not to mention it is one of the few economies to bounce back from Covid-19 fully), but they have also driven the country toward adopting more active and assertive Chinese-centric policies that have clear intentions and goals for steering the future of the country. To survive in China for the long haul, your brand needs to be able to adapt and change along with the country at large.
China is looking to become more Chinese.
A recent article (registration required) in the New York Times by Li Yuan did a great job of summarizing how Western languages and businesses helped rapidly modernize China, but are now facing ever-growing amounts of pushback. Adam Dunnett, the Secretary General at the EU Chamber of Commerce in China, was quoted by CNBC saying that “now you’ve really got to show you’ve got something that China wants, or China doesn’t feel is a competitor to its own interest and needs.”
The push toward more common prosperity policies in China has made the business environment more challenging, but not enough to make it off-putting to investors. Roughly 60% of U.S. businesses working in China have increased their investments in the country over the past year.
There are many regulatory challenges in the nation, and they are in great flux. For those companies looking toward the future in China, you need to understand that the requirements and demands of operating and fully assimilating into their economy will be great, and compliance will become a more significant challenge going forward.
This Chinese-centric mentality also extends to the shoppers themselves. Younger Chinese shoppers look more highly on local brands compared to years past, and they are more likely to buy from Chinese brands than ever before. However, many brands operating in the country for years, such as Olay, are regularly mistaken by Chinese shoppers as local brands. This shows that assimilation and familiarity with your target market will go a long way, and might be critical to long-term survival. You want to be viewed by local regulators and the shoppers you target as either Chinese or Chinese-friendly.
What all this means is that you need to be ready to conform to the Chinese methods of doing business and should make every effort to assimilate your brand into the wider culture.
Start to view the country as a collection of separately evolving regions.
One long-term survival tool is diversification. Luckily, China is such a large market that you have the opportunity to build multiple revenue streams within it.
There are considerable differences in the demographics of the 23 various Chinese provinces regarding population density, earnings, infrastructure access and other key metrics. For a business looking to expand into China, you need to understand just how these demographics lay across the land, where the real opportunities lie and how you can best interact with the people of that region. Everything from the messaging you use, to the experts you consult, should be chosen based on the region you plan to enter.
This will require more effort when it comes to localization but can enhance your resiliency to sudden shocks. And, by operating in different regions, you can divest from an area that is more competitive (and attracting negative attention) to one that is ripe for your business endeavors.
For example, a big part of the business I run revolves around providing knowledgeable experts with real-world experience in the regions and industries we translate for. The nature of this work requires us to continually diversify staff to provide the best level of expertise and quality. For instance, if we wished to expand into Hong Kong, we specifically look for current or former Hong Kong residents who intimately know the city’s culture, dialect and language.
My company’s industry has also required us to look closely into regions where we feel there is a strong demand for translation services. In this process, we carefully evaluate the overall cost-benefit of entering new territories. Right now, we’re finding that the increase in GDP in China has led to a larger middle and upper class, which has spurred growth in the business sector, and in turn, translation services. The next step is deciding which industries and dialects provide the most significant room for growth and expansion.
Thriving in a changing landscape requires adaptability.
While nobody knows for sure what the Chinese markets will look like in the years to come, it is plain to see that those who will continue to succeed in the country will need to be ready to adapt and conform at greater levels than ever before.
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