The business delegation of the Federation of Indian Chambers of Commerce and Industry, led by president R S Lodha and secretary-general Amit Mitra, has returned from China, enlightened with revelations that are perhaps the most jealously guarded secrets of the Chinese economy.
Here are Ficci's Ten Commandments for doing business in China.
The longer you cast your hook, the bigger fish you catch. There are no immediate returns on investments in China. Companies should expect to make profits after three years of being in business.
There can be only one chef in the kitchen. The Chinese do not believe in 50:50 partnerships. They feel joint management has failed because of hair-splitting regarding division of responsibilities. On average, the foreign equity in a concern has risen from 50 per cent in 1995 to 70 per cent in 2002.
Marriage is easy, not divorce. Due diligence is required before entering the Chinese market. It is important to study the sensitivities of the decentralised market carefully.
There are many Chinas. Each province is like a separate country. There is no strong pan-China brand and each province has its own brands. Even the movement of goods from one province to another is restricted.
Target the urbanites. The urban population in China has strong purchasing power. In Shanghai, the per capita income is $1,400 and is growing at 6.4 per cent in real terms.
Job-hopping is not easy. Every province has a talent agency. Job-seekers must route their applications through such agencies which maintain the personal files of candidates. If an employee seeks a transfer from one province to another, the agency has to approve it.
Equity partnership is not the best way of doing business in China. The Chinese prefer the strategic partnership model instead.
Corporates should avoid making very high capital investments.
A huge potential exists in retailing and franchising in China.
The period from 2004 to 2010 is the best time for making investments in China. Post-2010, there will be fierce competition from local and homegrown businesses.
