What Are the Disadvantages of Doing Business in China?

China has exploded onto the world markets since the 1980's when they began their push towards a more modern economy. While many western businesses have boomed--and it may seem to outsiders that China is a land of opportunity--there are pitfalls to operating in China. Despite appearances, China is not a fully westernized nation, especially in terms of its politics and how these influence business matters.

Making Connections

Connections are crucial to anything in China, and guanxi (gwan-shee) can make or break a business venture. This means a business must spend as much time dealing with people--and knowing the right people to deal with--as they do running the business.

The Darkside of Guanxi

Taken one step further, corruption is an unfortunate extension of having to make connections. Bribery is widespread, but also generally kept quiet and not prosecuted because it often involves political connections.

Politics

China is not a free-market economy. It has an authoritarian communist government. While they employ some of the same terms and strategies as full-fledged capitalist markets, political control is everywhere.

Local Pride

Chinese consumers often prefer to deal with local, Chinese-run companies rather than western enterprises. This also extends to favored treatment from political officials, and it can influence bids on projects and other ventures.

Piracy

Idea theft is rampant in China, and it extends far beyond DVDs and software. Not only is this a problem for companies engaged in buying and selling goods, but it can impact manufacturers who may unwittingly use counterfeit materials.

Resources

• US Gov Website for Business in China
• China Business Resources and Articles