Doing business in china for DUMmIES

by Robert Collins, MBA, and Carson Block,Esq
Doing Business
in China
FOR
DUMmIES
‰
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Doing Business in China For Dummies
®
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About the Authors
Robert Collins, MBA, is a senior executive with a major Fortune 500 financial

services company. Rob is also a former senior consultant with a leading inter-
national business consulting firm. He has more than 20 years of commercial
and business development experience in international markets. Rob is an
active member of the Mayor of Chicago’s Shanghai Sister Cities’ Business
Committee.
Rob gained a strong understanding of Chinese business and management
while living and working in Beijing and Hong Kong, China, for more than 12
years. He managed one of the earliest representative offices in China. While
working there, Rob was an officer with the American Chamber of Commerce
in China.
Rob obtained a joint MBA degree from the Kellogg School of Management
at Northwestern University and the Hong Kong University of Science and
Technology.
Rob and his wife, Sarah, have three children and reside in suburban Chicago.
The family is active in supporting Chinese-related educational initiatives. The
Collins family has hosted numerous Chinese exchange students in Hong Kong
and the U.S.
You can e-mail Rob at
Carson Block, Esq, is the founder and Managing Director of YBS Investment
Consulting, which is based in Singapore. In this role, Carson advises high net-
worth individuals and families on their investments. He also advises compa-
nies and investment firms on China-related investments. Prior to founding
YBS, Carson practiced law in Shanghai with Jones Day, a U.S.–based law firm.
In this role, he advised foreign clients on China foreign direct investment and
mergers and acquisitions. Before joining Jones Day, Carson was an equity
analyst and partner in W.A.B. Capital, a Los Angeles–based investment
boutique.
Carson obtained his Juris Doctor (High Honors) from the Chicago-Kent
College of Law. He earned his BS in business (finance) from the University of
Southern California.

Carson speaks Mandarin Chinese. You can e-mail Carson at carson@ybs
investment.com.
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Dedication
Robert Collins: I dedicate this book to my lovely wife, Sarah. Over many,
many years, she has provided me with unwavering support that has enabled
me to produce, among other things, the most contemporary work on doing
business in China. Sarah, you are the greatest gift that life has given me.
As young newlyweds, we moved to a far-off place called Beijing, China, in
1983. We were truly pioneers. Together, we witnessed the beginning of
China’s powerful transformation into the modern world.
This book is for my children, too. Thanks to your tremendous commitment to
the Mandarin Chinese language, you’re well positioned to participate in what
China has to offer. My delightful daughter is a treasure in more ways than I
can express. G.R., you’re an incredibly talented young man with all the mak-
ings of great success. And Z-man, born in modern China, you just simply rock!
And last but not least, I dedicate this book to my parents, Mike and Evelyn,
who consistently encouraged me to pursue my passion.
Carson Block: I dedicate Doing Business in China For Dummies to my father,
Bill. When I was a teenager and college student, he gave me the opportunities
to travel to Asia and to study Chinese (including in Beijing). When I gradu-
ated from college, he provided the backing that allowed me to go to Shanghai
and try my hand at business there. Without his support for my China endeav-
ors, neither this book nor my China career would have been possible.
Authors’ Acknowledgments
So many wonderful people contributed to Doing Business in China For
Dummies. They’re outstanding professionals in their fields, and they’ve
made this a significantly better book.
We’d like to particularly acknowledge a small group of people who spent sig-
nificant time assisting us with this book. Our warmest gratitude and thanks

go to Jay Boyle, Expat CFO; Beth Bunnell, Honeywell; Elizabeth Harrington,
E. Harrington Global; and Xiangyun (Gilbert) Zeng, Houlihan, Lokey.
We would also like to thank the following people for their valuable contribu-
tions: David Atnip, Chad Blackwell, Catherine Chen-Oas, Cheryl Chong,
Matthew Estes, Lefan Gong, Christopher Gray, Kevin Gromley, Max Gu, Ashley
Howlett, Nicole Kwan, Ted Lee, Jim Leu, Stephen Markscheid, Michael
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McNabb, Jeff Moore, Daniel Oas, Jennifer Qi, Sean Regan, Andrew Rice,
Andrew Ruff, Lee Satveit, Walter Schmid, Oded Shenkar, Paul Stepanek, Anita
Tang, Benson Tsai, Samantha Tsai, Cheng Wang, Jack Wang, Peter Wang, Rick
Wang, Dr. Yong Wang, Zheng Xie, Kent Yeh, Jia (Holly) You, Liming Yuan, and
Winston Zhao.
Many thanks to Alissa Schwipps, Senior Project Editor at Wiley Publishing,
for keeping us on the straight and narrow, and Danielle Voirol, Copy Editor.
And thanks to our literary agent, Carol Susan Roth, for her support and
guidance.
Lastly, we would like to thank Richard Pringle for introducing the co-authors.
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Publisher’s Acknowledgments
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Publishing and Editorial for Consumer Dummies
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Contents at a Glance
Introduction 1
Part I: Building Your Foundation 7
Chapter 1: So You Want to Do Business in China 9
Chapter 2: Brushing Up on China Business Basics 23
Chapter 3: Getting Acquainted with the Powers That Be:
China’s History and Leadership 41
Chapter 4: Planning for Success in China 55
Part II: Starting Up in China 71
Chapter 5: Traveling to and around China 73
Chapter 6: Getting Business Going through Successful Negotiation 97
Chapter 7: Setting Up Shop 113
Chapter 8: Understanding Government Relations with Your Business 139
Chapter 9: Building a Local Team in China 155
Chapter 10: Getting Your Mind on Money 175
Part III: Conducting Daily Business 197
Chapter 11: Understanding How China Works (and Doesn’t Work) 199
Chapter 12: Sourcing from China 219
Chapter 13: Manufacturing in China 233
Chapter 14: Selling in China 251
Part IV: Building Successful Business Relationships 275
Chapter 15: Fostering Fruitful Friendships: The Art of Guan Xi 277
Chapter 16: Saying and Doing the Right Things: Chinese Business Etiquette 289
Chapter 17: Managing Risks in China 311
Part V: The Part of Tens 335
Chapter 18: Ten Clauses You Want in Your Contracts 337
Chapter 19: Ten Fun Ways to Spend Your Downtime in China 343
Chapter 20: Ten Ways to Stay on the Path to Profitability 349
Index 355

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Table of Contents
Introduction 1
About This Book 1
Conventions Used in This Book 2
What You’re Not to Read 3
Foolish Assumptions 3
How This Book Is Organized 4
Part I: Building Your Foundation 4
Part II: Starting Up in China 4
Part III: Conducting Daily Business 4
Part IV: Building Successful Business Relationships 5
Part V: The Part of Tens 5
Icons Used in This Book 5
Where to Go from Here 6
Part I: Building Your Foundation 7
Chapter 1: So You Want to Do Business in China . . . . . . . . . . . . . . . . . .9
Understanding China’s Appeal 10
Cutting costs to meet global demands 10
Accessing a fast-growing local market 11
Considering Ways to Get In on the Action 12
Selling into China 12
Manufacturing and sourcing 13
Deciding Whether China Is a Good Fit for Your Business 14
Considering your employees 14
Having international experience 15
Getting company leaders on board 15
Having patient capital 15
Dealing with the government and laws 16
Appreciating cultural differences 16

Tracing the Path to Success 17
Getting the right knowledge of China under your belt 17
Starting your engine 18
Getting down to business the Chinese way 18
Organizing your team for China 19
Remaining flexible while staying the course 19
Respecting the country for what it is 19
Staying on the lighter side 20
Taking the First Steps: What You Can Do Today 20
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Chapter 2: Brushing Up on China Business Basics . . . . . . . . . . . . . . . .23
Considering Why and How You Want to Do Business in China 23
Manufacturing in the World’s Workshop 23
Harnessing people power to export services 24
Reaching untapped domestic markets 25
The Experts’ Choices: Some Long-Term Growth Industries
in China 26
Services 27
Healthcare 27
Environment and energy 28
Agribusiness 28
Understanding China’s Business Environment 29
The economy: Getting the goods 29
Politics: Grasping the state of affairs 32
Culture: Taking in the social scene 34
Laws: Surveying the government say-so 35
Buckle Your Seatbelt: Preparing for Common Challenges 37
Gaining trust 37
Wading through the bureaucracy 37
Responding to rapid changes 38

Surviving cutthroat competition 38
Bridging the language gap 39
Chapter 3: Getting Acquainted with the Powers That Be:
China’s History and Leadership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
Understanding the Big, Historical Picture 42
Introducing the Middle Kingdom: The rule of dynasties 42
Ushering in modern China and the rise
of the Communist Party 43
Industrializing with Mao: The first five-year plans 44
Opening the door to foreign investment 45
Party On: Understanding Who Controls the Country 46
The Chinese Communist Party (CCP) 46
The state 47
The People’s Liberation Army (PLA) 48
Figuring Out the Chinese Business Scene 49
Getting state-owned businesses in shape 49
Supporting private businesses 50
Encouraging foreign investors 51
Benefiting from the five-year plan 52
China and the World Trade Organization 53
Agreeing to play by the WTO rules 53
Changing how China does business 54
Chapter 4: Planning for Success in China . . . . . . . . . . . . . . . . . . . . . . . .55
Setting the Stage 55
Being in the right state of mind 55
Budgeting enough money 56
Doing Business in China For Dummies
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Garnering strong support from headquarters 56

Designating the China manager — the earlier, the better 57
Staying flexible 57
Deciding What You Want (and Need) 58
Where to locate 58
Staffing and worker requirements 59
Building up: Whether to walk or run 59
How to sell in China 60
How to maintain competitive advantages 60
How to finance the venture 60
Doing Your Homework 61
Continuing research as you develop your plan 61
Networking 62
Reading up 63
Reaching out to organizations 63
Hiring Consultants, Lawyers, and Accountants 64
China (and Western) experience 65
Teamwork 65
Information flows 65
Specific experience 66
Being Aware of Common Planning Mistakes 67
Overestimating revenue 67
Underestimating costs 67
Rushing the process 68
Not accounting for the X-factor 68
Mistaking Chinese language for China 68
Losing sight of what you know 69
Putting Some Eggs in Another Basket 70
Part II: Starting Up in China 71
Chapter 5: Traveling to and around China . . . . . . . . . . . . . . . . . . . . . . . .73
Getting the Necessary Documents and Vaccines 73

Passport 73
Business invitation to China 74
Visa 74
Vaccines and health requirements 76
Making Flight and Hotel Arrangements 77
Flying directly into mainland China 77
Flying into Hong Kong first 79
Finding a good hotel 79
Navigating the Airport after You Land 80
Health and quarantine 80
Immigration 81
Baggage claim 81
Customs 81
Getting from the airport to your hotel 82
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Around and About: Traveling within China 82
Taking flight in the Middle Kingdom 83
Taxiing 83
Taking the subways 84
Busing around 85
Riding the rails to and fro 85
Considering a travel card 86
Getting through the Basics of Daily Life 87
Finding money 87
Staying healthy 88
Weathering China 92
Preparing for crowding and noise 92
Dealing with pollution 92

Staying Out of Trouble 93
Contacting your embassy or consulate 93
Protecting yourself against crime 93
Foiling scam attempts 94
Staying clear of counterfeits 95
Keeping out of restricted areas 95
Avoiding legal problems 96
Chapter 6: Getting Business Going through
Successful Negotiation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .97
Preparing for the Process 98
Organizing your team 98
Developing trust and then doing your bargaining 99
Considering how best to divide the pie 99
Practicing the Chinese Art of Negotiating 100
Thinking like the Chinese 101
Navigating Chinese negotiation tactics 102
Taking the time to get it right 104
Exchanging information 105
Keeping track of all the details 106
Saying no the Chinese way 107
Treating anger appropriately 107
Using intermediaries effectively 108
Making concessions 108
Banqueting as part of the deal making 109
Earning Approvals in China: Understanding the Bureaucracy 110
Negotiating after the Deal 110
At Long Last: Telling the Public and Celebrating the Deal 111
Announcing the news 111
Showing off for the cameras at the signing ceremony 112
Celebrating the venture 112

Doing Business in China For Dummies
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Chapter 7: Setting Up Shop . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .113
Choosing the Right Business Structure 113
Representative offices 114
Foreign-invested enterprises 115
Considering Location Variations 121
Finding good infrastructure 122
Locating your labor force 122
Seeking government incentives 123
Looking for experience with foreign investors 124
Touring the Mainland Regions 124
Northeastern China 124
The Yangtze River Delta 126
The Pearl River Delta 126
The wild, wild west 127
Weighing Hong Kong’s Offerings 127
Hong Kong’s special status: The SAR (it’s not
something you catch) 127
Perks of investing in Hong Kong 128
Hong Kong hang-ups 130
Classifying Your Company and Reckoning with Restrictions 130
Checking out the catalog 131
Identifying highly regulated industries 132
Establishing Your Business 132
China, may I? Getting business approvals 133
Landing your land 136
Visas: Getting yourself and your expatriate employees
to China 137

Chapter 8: Understanding Government Relations
with Your Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .139
Knowing Why You Want to Connect with
the Chinese Government 140
Getting official assistance 140
Gaining guidance and support 141
Mapping the Bureaucracy to Plan Your Network 141
Identifying key government organizations 142
Identifying the key influencers 142
Tracking key relationships 143
Contact: Working Your Network 145
Getting your Chinese employees to make connections 145
Calling in company big shots to access senior officials 145
Depending on your Chinese partner 146
Turning to consultants 147
Aligning Your Government Relationships 147
Taking the bottom-up approach for smaller firms 147
Meeting in the middle: Managing multiple levels
of government 148
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Getting Government Approvals 149
Earning your approvals 150
Unblocking the blockers 151
Gaining trust by keeping your word 152
Educating officials (without telling them) 152
Post-approval: Practicing public relations in China 153
Chapter 9: Building a Local Team in China . . . . . . . . . . . . . . . . . . . . . .155
Looking at Employees and the Law 155

Employment contracts 156
Terminating employees 160
Legal disputes 161
Unions 161
Avoiding a Shocking Corporate Culture 162
Passing up the Chinese imperial palace 162
Guarding against imperial palace syndrome 163
Finding (and Keeping) Good People 166
Employer beware: Avoiding common problems
among job seekers 167
Finding applicants 167
Screening applicants 168
Making an offer 171
Retaining talent 171
Managing Your Employees 172
Setting your expectations for basic training 172
Helping employees manage their work 172
Earning respect 173
Managing office politics 174
Chapter 10: Getting Your Mind on Money . . . . . . . . . . . . . . . . . . . . . . .175
Introducing China’s Currency: The Tricky RMB 175
What you need to know about the RMB 176
What RMB exchange controls mean for your business 177
Choosing a Bank for Your Business 177
Opening All the Necessary Accounts 178
Working with the people’s currency: Your RMB account 178
Switching things up: Accounts for foreign exchange 179
Getting Your Money Out of China 180
Sending profits back home 181
Repaying foreign debt 182

Using other money exit strategies 182
Financing Your Business 183
Borrowing from offshore 184
Borrowing from onshore 185
Checking out special types of debt financing 186
Getting private equity financing 188
Doing Business in China For Dummies
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Paying the Government without Taxing Your Patience 190
Corporate taxes 190
Individual taxes 193
Part III: Conducting Daily Business 197
Chapter 11: Understanding How China Works
(and Doesn’t Work) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .199
Getting Things Done the Chinese Way 199
Honoring face 199
Focusing on consensus 200
Working together for mutual benefit 201
Developing patience 203
Sending consistent messages 204
Sharing information 204
Keeping the dialogue going despite bumps in the road 205
Talking to the right authorities 205
Making Face-to-Face Business Meetings Work for You 206
Getting your basic presentation ready 206
Preparing to speak the local business language 208
Making an appointment 208
Making a respectful entrance 210
Takin’ care of business 212

Wrapping up the meeting 215
Communicating Effectively Outside the Meeting Room 215
Using the telephone 216
SMS and text messaging 217
Faxing 217
E-mailing and the Internet 218
Chapter 12: Sourcing from China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .219
Understanding Why You May Want It Made in China 219
Working with Suppliers 220
Finding suppliers 221
The middleman: Surveying trade-offs of trading companies 221
Straight from the source: Dealing directly with factories 223
Following Tips for Supply Agreements 225
Product description 226
Delivery date 226
Payment terms 226
Insurance 226
No toxic substances 227
Indemnification 227
Binding arbitration 227
Avoiding Pitfalls When Working with Suppliers 227
Not getting what you bargained for 228
Being outsourced: The factory’s factory 228
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Losing your brand or technology 229
Including substances that are toxic to your business 229
Placing Orders 230
Putting down a deposit 230

Purchasing goods via free on board arrangements 231
Shipping Your Products by Using Freight Forwarders 231
Chapter 13: Manufacturing in China . . . . . . . . . . . . . . . . . . . . . . . . . . .233
Being Realistic about Savings 233
Considering Industry Development 234
Looking at Manufacturing Challenges for the Chinese Market 235
Struggles to cut costs enough to compete
in domestic markets 236
Highly distributed distribution 236
Why foreign manufacturers can succeed 236
Selecting Your Site 237
Seeing the big picture when planning your business 238
Remembering what smart companies look for 239
Knowing how government can help 240
Avoiding site pitfalls 241
Building Your Building 241
Identifying the players 241
Finding a general contractor 242
Contracting your GC 242
Protecting yourself by hiring a project manager 244
Approvals: Getting through the Red Tape 244
Before construction 244
Beginning operations 245
Hiring, Training, and Keeping Your Workers 246
Encouraging teamwork 246
Expecting skills gaps 246
Training 247
Treating your workers well 248
Hiring Quality Control 249
Chapter 14: Selling in China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .251

Appealing to the Chinese Consumer 251
Knowing your customer 252
Helping customers show their “face” 253
Looking at name recognition: The Chinese and branding 253
Getting Ready to Deliver: It’s All about Distribution! 256
Where your products get sold 256
Three distribution choices 258
Trench warfare in distribution 261
Advertising 263
Keeping the message simple and obvious 263
Getting the message out 264
Doing Business in China For Dummies
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Deciding How You Want to Enter the Market 265
Guns blazing 266
Starting with a beachhead 266
Letting others blaze the trails for you 267
Selling to Consumers 268
Retail stores 268
Franchising 269
Direct-to-consumer 272
Selling services 272
Selling Business-to-Business 273
Part IV: Building Successful Business Relationships 275
Chapter 15: Fostering Fruitful Friendships: The Art of
Guan Xi
. . . . .277
You Scratch My Back, I’ll Scratch Yours: Introducing Guan Xi 277
Trusting performance 278

Repaying favors 279
Developing guan xi in government and business 280
Developing Your Own Guan Xi 282
Starting from square one: Reaching out 282
Building bridges to your target contacts 284
Following through on your promises 286
Putting your best foot forward 287
Looking at the Limitations of Guan Xi 287
Chapter 16: Saying and Doing the Right Things:
Chinese Business Etiquette . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .289
Minding Your Business Manners 289
Dressing for success 290
Greeting and meeting the Chinese 291
Presenting your business card 291
Behaving yourself in Chinese company 293
Enjoying a Chinese Banquet 294
Knowing what to expect 295
Navigating the many courses 299
Eating the Chinese way: Using chopsticks 301
Drinking at the banquet 302
Understanding Chinese banquet behavior 304
Returning the favor: Hosting a banquet 306
Tokens of Appreciation: Giving Gifts Correctly 307
Deciding how much to spend 308
Choosing an appropriate gift 308
Paying attention to presentation 309
Exchanging gifts 309
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Chapter 17: Managing Risks in China . . . . . . . . . . . . . . . . . . . . . . . . . .311
Doing Due Diligence 311
The basics: Reviewing the business license 312
Practicing DD for joint ventures 312
Doing DD for hiring individuals 313
Controlling Financial Risks 313
Counting beans differently 314
Balancing an out-of-balance sheet 314
Exposing shadow businesses 315
Practicing common-sense controls 315
Supporting controls through company culture 316
Limiting Your Legal Risks 316
Thinking locally 317
Implementing corporate governance 318
Combating Corruption 320
Understanding bribery laws 320
Keeping government relationships straight 321
Training for compliance 321
Managing donations responsibly 322
Resolving Disputes through Arbitration 322
Understanding arbitration clauses 322
Surveying arbitration bodies 323
The rulebook: Determining governing law 324
Enforcing the rulings 324
Protecting Intellectual Property 325
Getting IP registered early 325
Taking proactive legal measures 326
Practicing realistic precautions 327
Managing Environmental Risks 328
Surveying environmental crime and punishment 329

Practicing more than good intentions 329
Getting help 330
Insuring Your Business Risks 331
Controlling the insurance program 332
Getting insurance advice 332
Knowing your choices of companies 332
Looking at basic types of insurance 333
Doing Business in China For Dummies
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Part V: The Part of Tens 335
Chapter 18: Ten Clauses You Want in Your Contracts . . . . . . . . . . . . .337
Chapter 19: Ten Fun Ways to Spend Your Downtime in China . . . . .343
Chapter 20: Ten Ways to Stay on the Path to Profitability . . . . . . . . .349
Index 355
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Introduction
F
or many Westerners, something about China is so intense and exciting
that it’s a social glue among those who’ve spent some time there. We met
through a mutual acquaintance who knew we had backgrounds in China. Over
lunch, we swapped stories (and laughs) about living and doing business in
China — how challenging the market is, how strong a role government plays in
business there, how overwhelming the country can feel, and how everything
seems to take so much longer to get done. We both admitted that a solid how-
to guide could’ve saved us a good deal of time hard spent climbing the learn-
ing curve. And so Doing Business in China For Dummies was born.
We think (and hope) that you can find this book useful as a starting point and

reference in your China business adventure. As you find out when reading the
book, little about doing business there is easy. Your company needs to figure
out how the Chinese business system works and how to develop and manage
Chinese relationships — and your company needs to be willing to make a
commitment to the market for the long haul. You need a lot of patience along
the way, too. But with this book as your guide, your company (and you per-
sonally) can benefit from the opportunities that China offers.
About This Book
Doing Business in China For Dummies tells you what you need to know to suc-
ceed in China. How does business really work there? How do you get started?
What do you need to do to get your business up and running properly?
You decide where to start and what to read. This book is a reference tool for
you and your business when and where you need it. It’s designed so you can
read and understand chapters of interest without having to read the rest of
the book. (Of course, you’ll be better prepared if you do read the whole thing,
even if you don’t do so in order.) Just use the table of contents or index to
find the topics you want.
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This book is organized for easy reference. It’s divided into five parts, each
with multiple chapters. Within each chapter are various sections that discuss
some aspect of doing business in China, such as
ߜ The types of approvals you need to get started
ߜ Deciding where to set up shop
ߜ Auditing factories
ߜ Advertising
ߜ Enjoying a Chinese business banquet
After you read this book, you won’t be ready to do business on your own in
China; you will, however, have a much better sense of where you need help —
through attorneys, translators and consultants, and the like. You’ll also have
learned from mistakes other foreign businesspeople have made in the Middle

Kingdom. In that way, you’ll start out better prepared than a lot of business-
people who’ve ultimately been successful.
Conventions Used in This Book
We use the following conventions throughout the text to make things consis-
tent and easy to understand:
ߜ All Web addresses appear in monofont.
ߜ New terms appear in italics and are closely followed by easy-to-
understand definitions. Italics may also indicate emphasis.
ߜ Bold highlights the action parts of numbered steps and key words in
bulleted lists.
ߜ Chinese words are written according to the official pinyin system of
Romanization, usually followed by phonetic spellings.
ߜ The word domestic refers to China; foreign refers to anywhere outside of
China.
ߜ The Chinese government controls exchange rates of the Chinese
renminbi (RMB), or yuan; because the government has been gradually
appreciating the RMB, we don’t convert it to U.S. dollars. You can find
the current exchange rate at finance.yahoo.com/currency. We do,
however, offer equivalents of Hong Kong dollars.
2
Doing Business in China For Dummies
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What You’re Not to Read
We’ve written this book so you can find the information you want when you
want it. We think you’re probably too busy running your business to want to
read every word from start to finish. We’ve identified some information in
this book as skippable material. You may find this information of interest if
you have spare time on your hands, but you won’t sink a business deal just
because you skipped over it! So we won’t be offended if you don’t want to
look at information such as

ߜ Text in sidebars: The sidebars are the shaded boxes that appear here
and there. They share mini business case studies and observations
on China. Some of them are funny or outrageous. They can be useful
illustrations of points that we’ve made in the text.
ߜ Anything with a Technical Stuff icon attached: This information is
interesting but isn’t required reading to get an understanding of
business in China.
ߜ The stuff on the copyright page: Maybe you want to save this info for
some late night bedtime reading while you’re trying to overcome the jet
lag from your trip to China! (Otherwise, if you’re thinking of knocking off
this book, rest assured that it’s protected by copyright.)
Foolish Assumptions
We wrote this guidebook on China with some thoughts about businesspeople
like you. Here’s what we assume about you, our valued reader:
ߜ You’re a business professional with some know-how about running a
company. You may have some knowledge about international markets.
ߜ You’re looking for solid advice on how to understand the Chinese busi-
ness system and the Chinese culture, too. You want a book that explains
China business in a way that can add immediate value to your company
and can be put to good use today.
ߜ You’ve heard the hype and want to understand if and how your business
can benefit by being in China. Or you have a great idea for a business
and want to figure out whether it’ll work in China. You want to know
what opportunities in China make the most sense.
ߜ You’re part of a small- to medium-sized manufacturer looking for sourc-
ing or a small company looking to sell your product or service in China.
You want to do business within China or from abroad.
ߜ Much of what you know about China comes from reading Western news
sources.
3

Introduction
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How This Book Is Organized
Doing Business in China For Dummies is divided into five parts, and the parts
are divided into chapters. In the following sections, we give you a brief look
at what you can expect from each part so you can get started right away with
the area that interests you most about doing business in China.
Part I: Building Your Foundation
The best way to get up to speed on China is to understand the possibilities of
expanding your business to China. Starting in Chapter 1, we help you deter-
mine whether your company is a good fit for China and suggest the first steps
to take. In this part, you get a rundown of China business basics, including its
challenges and opportunities. Along the way, we show you how you can
ensure that your business plan is strong and executable. We help you deter-
mine what to include and what to prepare for.
Part II: Starting Up in China
Figuring out how business works in China calls for a novel take on business
as you know it. We give you the lay of the land when it comes to setting up
shop. You also get a feel for the different regions where you may consider
setting up. We introduce you to key geographic areas that you may want to
concentrate on.
From there we talk you through the Chinese government — a key player for
any business in China. Building your business in China wouldn’t be complete
without finding the right people to work in the business, so we give you
advice on hiring a local team. And then we show you the keys to unlocking
the mystery of finance in China.
Part III: Conducting Daily Business
After you’re committed to doing business in China, you’re ready to go on
location. Don’t be intimidated by the vast land mass that makes up the
Middle Kingdom, though. We first help you understand the Chinese way of

doing things. Their traditions are deep, but you can find ways to make them
work for you. We help you literally find your way: From flights to taxis, con-
verting money to finding health care, consider this chapter your basic day-to-
day personal guide. Getting down to business, we tell you all about sourcing,
selling, and manufacturing. And we also explain how to negotiate with your
hard-nosed Chinese counterparts across the table.
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Doing Business in China For Dummies
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Part IV: Building Successful
Business Relationships
As you figure out in this part, relationships are important to business in
China. We guide you to better understand the importance of guan xi (connec-
tions/relationships) to help you develop and cultivate your most important
business relationships. You discover how to successfully navigate the lavish,
long-winded Chinese business banquet with grace. We also give you what you
need to know to make you look smart rather than foolish. And lastly, we get
your business prepared for whatever comes your way in China.
Part V: The Part of Tens
The Part of Tens gives you and your business a bunch of good pointers such
as good contract provisions and tips on how to make a profit in China. To
take your mind off your work, we share our hand-picked list of ways to enjoy
your downtime (in the event you have any!) in China. China’s an exciting
country worth exploring, and we want you to do just that.
Icons Used in This Book
To make this book easier to read and simpler to use, we include some icons
that can help you find and fathom key ideas and information.
This icon appears whenever we have a shortcut to share or an idea that can
make your plans even better.
Anytime you see this icon, you know the information that follows is so impor-

tant that it’s worth locking away for quick recall later.
This icon flags potential pitfalls for you or your business in China.
This icon appears next to information that’s interesting but not essential. Feel
free to skip these paragraphs.
5
Introduction
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Where to Go from Here
We’ve organized this book so you can go wherever you need to and get the
information you want. Working on your business plan? Check out Chapter 4.
Want to know how to get money into China? Head to Chapter 10. If your
company wants to sell in China, go to Chapter 14. At any time, you can use
the table of contents to find more information or the index to look up more
specific topics.
We suggest that you start with Part I if you don’t know where you want to go.
Starting at the beginning is always a good idea — especially in a complex
place like China! Part I gives you what you need to know about the basics of
doing business in China and more.
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Doing Business in China For Dummies
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Part I
Building Your
Foundation
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