Since Deng Xiaoping assumed the reins of power in the late 1970s, no country has modernized as fast - or as drastically - as China. During the last quarter century, China has transformed from a collective agricultural society to a juggernaut of capitalism, investment and high-tech manufacturing. This rise from a mainly agrarian economy to one which boasts 200 urban centers with a population of at least a million people each is truly staggering and unequaled in the history of modern civilization. Coupled with the reunification of Hong Kong and the mainland in 1997 and the growing financial inter-dependency with Taiwan, China is looming on the horizon as a leader in the new world business order.
In 2002, China accounted for 16% of the growth in the world economy, ranking second only to the United States. And since 1970, China's gross domestic product has ballooned from 6 billion to a lofty .3 trillion, all of which provides both optimists and pessimists with food for thought.
As the Asian market, primarily mainland China, continues to open its doors of opportunity to western businesses, many will find that their first experience into China will be ripe with obstacles and pitfalls. These difficulties stem from the fact that many companies fail to pay proper respect to the intricacies and nuances of this new and emerging market because in China, business is guided by a culture and history centuries in the making. This is often overlooked by those of us from the western world.
Where many companies have faltered or have outright failed when approaching China is that they underestimate the market. When thinking of China, these companies get caught up with dollar (or euro) signs in their eyes as they view a large and potentially lucrative marketplace. The truth of the matter is that companies cannot simply walk into this market and start making money.
The process of establishing a successful business venture requires a willingness to endure an adoption by the public and the building of connections (guanxi) with local government officials and members of the business community. While understanding a country's culture and history is always an advantage in doing business abroad, an understanding of the culture and history of China is a must when dealing with China. Companies need to understand that to the Chinese Diaspora the drive to economic achievement is not just about money, but rather it is a reawakening of nationalistic pride.
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