BY;NIKHIL SWATI SANJANA

According to the 2012 ease of doing business index created by the World Bank, China ranks 91 out of 183 economies listed. This indicates that China is not an easy place to do business; however it is still the highest ranked economy of the BRIC countries. If your goal is success in China, the right cultural and business approach is vital It is important today for Europe to establish strong ties with China over a broad range of activities. This stems from a number of considerations. China represents one quarter of the worlds population.

Over the past thirty years China has for the first time ever engaged fully with the international economy, and has registered extraordinary rates of growth on average over 8% per annum of GDP since 1984. In the twenty-first century, China will occupy a preminent position in international affairs. Major environmental and health issues affecting the prospects for sustainable development globally will not be resolved without Chinas active participation.

A wealth of opportunities
More than any other five year plan, Chinas 12th Five Year Plan, 2011-2015, focuses on quality of life over quantity of GDP. It offers a wealth of opportunities for international companies to sell technology, equipment and consultancy to China in many ways.

Key economic targets

Annual GDP growth: 7% Increase urbanisation from 47.5% to 51.5% Increase service sector contribution to GDP by 4 percentage points, from 43% to 47% Increase spending on R&D to 2.2% of GDP Hold inflation (CPI) at or below 4% per year

Key non-economic targets

Increase non-fossil fuel use to 11.4% Reduction of energy use per unit of GDP: 16% Reduction of CO2 emissions per unit of GDP: 17% Increase forest coverage by 21.66% Decrease pollutants COD and sulfur dioxide by 8% each

What are the main challenges involved in doing business with China and how should they be approached?

1. Sell what China wants; buy what China can supply.

In recent years, goods successfully imported into China have included sophisticated machinery and technical equipment, transport equipment, mineral resources, agricultural products and, increasingly, luxury goods of all kinds. Technology is consistently in demand in China, particularly related to automotive, power generation, aircraft parts, oil and gas processing, the manufacture of electronic equipment and environmental technology. Services which have successfully been supplied to China have included trade-related services such as handling and international transport, financial services and the provision of consultancy on health, safety and the environment.

2. Have the right attitude.

A recent study* shows that around 50% of global business leaders see China as the greatest opportunity facing their business. Developing business with China may not always be easy, but the possibilities are too important not to explore. A positive attitude, patience, a polite and respectful manner, consistent attention to detail are all qualities which Chinese businesses will expect to see reflected throughout your orgnisation

3.Take a long-term view.

China is a market where you definitely need to take a medium to long term view. If you must look to the short-term, China may not be for you. Successful business in China can only be built up over time and requires the careful cultivation of personal relationships, the development of trust and constant attention to the needs of the project in hand. Firms which take a ten to twenty year view of the China market are usually the most successful.

4.Know your market.

There is extensive contextual information in sources like the Economist Intelligence Units Country Reports, the Far Eastern Economic Review, the Asian Wall Street Journal and the South China Morning Post, all of which are published in Hong Kong. These sources are in English as this does attend to be the language of business with China.

5. Attend to due diligence.

There is a real need to be thorough in observing due diligence in China. This may best be addressed by obtaining specialist professional advice. As some have found to their cost, failure to do so can result in working with unsuitable local business partners which, as some European businesses have found to their cost, can result in disastrous consequences

6.Present offers which are fair and true.

Discussions with your Chinese counterparts must give an accurate representation of the characteristics of the product, technology or service which you are offering. Sometimes we are victims of our own propaganda and may overstate our case, perhaps believing that the Chinese will not know much about the product, technology or service in question. If this was ever true, it certainly is not now. Presentations made in an unboastful and matter-of-fact way will be far more convincing and will avoid giving offence.

7.Tailor your offer.

Chinas circumstances and the challenges it faces in its efforts to modernise are in many ways unique. Products, technical solutions or services which are suitable in other contexts are not always appropriate for China. And off-the-shelf solutions, however good elsewhere, may not win the contract

China a special market - A market of significant Size - A market of significant Growth - A market of significant Resiliency - A market with increasingly Normal business environment but not without Risk * Maturization of reforms and opening up * Chinas entry into WTO * Business friendly government policies - A global market with virtually all major MNCs present - A global low cost manufacturing base - Large reservoir of high quality low cost engineering talent, skilled labor and a developing management pool

Areas of Opportunity
Energy, including efficiency Environmental protection Financial Services Information & Communications technology Creative Industries/Design Enhanced public services - health & education Innovators

OVERVIEW
In China, major decisions are made by people at the top, but many people are involved in operational decisions. Lower-level managers have very little authority to make decisions. Decisionmaking through the central planning bureau is under the direct control of the state. This, unfortunately, results in a lack of flexibility in the implementation of the decisions. Although there is a realization of the need to change, managers in the upper echelons of the hierarchy resist reforms because it would mean giving up some of their privileges they have as officials. Organizing involves setting up a structure to coordinate human efforts so that people can contribute effectively and efficiently to the aims of the business. This requires determining roles, responsibilities, and accountability.

Chinese managerial practices are very much influenced by the fact that the businesses are owned by the state and guided by government officials. This results in a bureaucratic organization structure that does not respond well to changes in the environment. This may not have been crucial in the past (although it is ineffective) because managers did not have to respond to competition. While factory managers, as people, are expected to achieve the yearly plan, on lower levels the notion of a vague collective responsibility prevails. Within the formal bureaucratic structure the relationships among people are rather informal. Recently, attempts have been made through the "factory responsibility system" to delegate more authority to lower levels. In fact, factories are allowed to make profits, though these profits are specially taxed. Like in Japan, there are strong organizational cultures in Chinese businesses . Research indicates that the degree of identification with the business may vary greatly. Even with a low degree of commitment to the company, this does not result in frequent organizational changes because it is very difficult to change jobs among state-owned organizations. And there is a lack of competitive spirit among Chinese employees.

Thank you.