Hear from two founders about the importance of being on the ground when expanding internationally
Friday, September 14, 2018/
Nearly half of Australian small business owners are planning to operate overseas in the next 12 months, with China seen as the most attractive market to expand into, according to a 2017 report by the NBN.
We caught up with two Australian founders to learn more about what makes China an attractive market to SMEs and how they managed the growth of their businesses.
Why China is challenging, but attractive
Speaking to SmartCompany, AROMABABY Natural Skincare founder and managing director Catherine Cervasio said much of her brand’s export is across Asia.
“We began with Hong Kong over fifteen years ago, then South Korea, Singapore, Taiwan and more recently China,” she said.
Entry barriers to the Chinese market go beyond language and cultural differences and include, for example, a complex regulatory system for importing personal care products, she said.
Despite the large market, competition can be fierce. “Let’s remember it’s not only Australian brands trying to export to China, brands from all over the world are all vying for a slice of the 1.4 billion population-strong pie,” Cervasio said.
The advantage of being on the ground
According to Cervasio, successful business relationships require business owners to invest in two things: time and face-to-face meetings.
“Of all the markets we work in, I would say this is particularly so for China,” she said.
Even with local agency support and previous success in the export market, meeting distributors, marketing agents, store owners and other partners is critical.
“By travelling to China it enables me to get a ‘feel’ for who I am dealing with. Being on the ground also helps you understand the differences that are evident even between provinces, learn more about the culture and ultimately build those face-to-face connections, which are so important.”
Media Mead managing director Scott Bidmead agrees that it’s the connections made on the ground in China that make a difference.
“Technology can’t compete with the impact of sitting with someone, sharing a meal or a beer in developing rapport and lasting business relationships,” Bidmead said.
“Face-to-face also allows for more freedom of ideas and brainstorming to flourish.”
Investment in travel has paid off for Bidmead. His company works with various large sporting and tourism events and organisations in China by offering them exposure into Australia and assistance with their media, PR and production needs.
“One contract has led to another and we have been able to develop a solid relationship with Chinese organisations… it’s had some massive benefits to the growth of our business,” he said.
Top tips for business travel to China
Having clocked up plenty of business travel across China, Bidmead and Cervasio offer the following tips to other small business owners looking to expand into China:
- With things like social media, Google, Gmail and other apps banned, find ways to work within these confines before getting there.
- In remote China, stable internet is hard to come by so always get a local SIM card with data and invest in a portable hotspot.
- Take advantage of a business travel program and start collecting points each time you fly – they can help make your travel more comfortable with upgrades and lounge passes.
- A translator is an obvious help, though you can earn a lot of respect by trying to learn some of the language.
- Learn some of the cultural norms – for example, if you finish your entire plate it means you are still hungry or not fully satisfied.
- Find an airline with the most convenient flight network and schedule, taking into account flight times and direct flights to China to minimise your time in the air.
- When doing business in China you’ll often be expected to join your hosts for dinner, banquet style. If you’re invited out for karaoke after dinner, take it as a good sign!