by Phillip Chang, Co-Founder and VP/General Manager of Greater China for Ayla Networks
When we founded Ayla Networks four and a half years ago, we believed strongly that the Internet of Things (IoT) would be big, worldwide—and that China would be an important market.
The IoT is all about connectivity and connections, not just at the technology level, but also at the ecosystem level. Doing business in China also requires a ‘connectivity’ attitude that can feel unfamiliar to people accustomed to doing business in the western world.
U.S. companies look across the Pacific Ocean to the billion people of China and see opportunity. But it has proven difficult for some companies to replicate their U.S. success in China.
Ayla is different. We have had a focus on China from the very beginning of our company. As a co-founder of Ayla, I have brought more than 20 years of experience growing technology companies in China, Taiwan, and the United States. For U.S. companies interested in doing business in China or working with Chinese customers, I am sharing some hints based on the lessons I have learned about both the similarities and the differences between these regions.
1. Understand differences in Chinese business models and culture. Chinese culture values strong relationships and social connections in doing business; U.S. culture focuses more on the transactions themselves. U.S. businesspeople should prepare for different approaches to meetings, negotiations, contracts and sales processes. Remember that many of the qualities prized and assumed to be important in the west—informality, horizontal social structures, fast and direct speech, competitiveness, and separation between ‘business’ and ‘personal’ realms—can be interpreted in China as arrogant, inappropriate or even offensive.
Be sensitive to the position of the people you will meet with in China, and choose your own representatives accordingly. Avoid pushing for a quick decision on an agreement; voicing strong dissenting opinions in a meeting; adopting a winners-and-losers strategy; or doing anything that could be perceived as putting someone on the spot.
2. Recognize differences in product priorities. Chinese tech companies move quickly, with short cycle times. If you manufacture a product or deliver a service, invest in technologies and processes that reduce the number of touches required to get a product to market. Enabling manufacturers to iterate on product development rapidly is key for the Chinese market.
3. Don’t assume you already know what a Chinese customer will want. Don’t arrive with your business model already complete. Adopt a consultative approach. Ask your prospective customers what they need, then listen carefully to the answers. Also, remember that as in any other large country, there are regional differences, as well. Tier-one cities such as Beijing, Shanghai, Guangzhou and Shenzhen all have different culture differences and product expectations, and not to mention the marketing differences between tier-one, -two, -three and tier-four cities.
4. Establish a local presence. It’s not enough to hire one or two Chinese-speaking employees. Set up local operations in China staffed by Chinese nationals who understand not only Chinese language, but also the cultural nuances of doing business there. In addition, timely response is critical in such a fast-moving market.
5. Help your Chinese partners expand their business outside of China. As you work to establish or extend your operations in China, reciprocate by also helping your Chinese customers to extend their own markets to the U.S. and other Western countries. Work closely with your Chinese customers to understand their plans for product exportation outside of China and adjust technology solutions accordingly.
6. Understand and use the business tools and style of communication popular in China. For example, WeChat holds a status in China that is unlike anything comparable in the U.S. It’s like email, messaging, Twitter, Facebook, YouTube and LinkedIn all rolled into one. It’s not uncommon for people in China to spend the majority of their working hours or to conduct primary business communication using WeChat.
In addition to WeChat, familiarize yourself with other important Chinese businesses, such as Baidu, Alibaba and Tencent (known collectively as BAT), the three giant Internet and social media providers in China; JD.com (formerly 360Buy), one of the largest B2C online retailers in China; and Xiaomi, the world’s third-largest smartphone manufacturer.
7. Incorporate features needed by Chinese consumers. If appropriate for your products and services, enable WeChat access for consumers’ use—whether you market your products directly to consumers or via a Chinese business partner.
8. Cooperate, don’t compete, with local companies. Adopt an attitude that you’re all working together to build a complete, big ecosystem together. The U.S. mindset tends to be competitive: The goal is to be ‘the winner,’ and competitors must ‘lose’ in comparison. This kind of approach is generally frowned upon and considered counterproductive in China.
9. Become familiar with local marketing promotion tools. Just as it’s important to communicate with Chinese business partners using the tools and methods they prefer, it’s also vital that you promote your products and services using locally appropriate marketing tools. WeChat Public Accounts and ads in local media are the two best ways to promote your offerings.
10. Plant deep roots in China, and grow as the Chinese market grow. Even if you have a large or highly successful business in the U.S. or other Western regions, don’t try to transfer that size or success directly to the Chinese market. Start small. Establish strong local ties. Build your business in China as a separate entity, with a rhythm attuned to China and its needs.