TL;DR – There’s money to be made… and lost in China.
Minister Chan Chun Sing recently had a close-door dialogue session with marketing practitioners. It was part of the Digital Outlook 2018 Marketing Symposium. At the session, he asked whether they thought that the growth in sales would come more from within Singapore or from overseas markets. Almost everyone in the session expressed that they expected to see more growth from overseas markets than from Singapore over the next five years. Minister Chan had said,
“Singapore can be your launchpad, but should not be your end goal.”
He shared that for marketing professionals to be successful, it is crucial for them to unearth and find the needs of customers even before customers discover their own needs. Marketing professionals must go beyond Singapore to grow their companies’ businesses by having in-depth understanding of the overseas market as well as the ability to scale up without constraint of size and geography.
So they say China is a huge market with plentiful opportunites
Right, so China is a huge market. It’s cited as one of those overseas markets that many Singaporean companies are interested to expand into. Yes, China presents many, many opportunities. But it also presents many pitfalls.
And scams abound, too, in China.
That’s something that Mr Francis Ng, the boss of House of Seafood, found out the hard way. He was contacted by a certain Mr Zhang from China sometime in November last year. Mr Zhang claimed that he represented a trading company in Shanghai. Mr Zhang convinced Mr Ng that the trading company in Shanghai was interested in doing business with House of Seafood.
So Mr Ng flew to Shanghai to meet Mr Zhang. They concluded negotiations where Mr Zhang and Mr Ng signed a contract where Mr Zhang’s company agreed to buy S$240,000 worth of vacuum packed crabs from House of Seafood. Mr Zhang then told Mr Ng that it is customary in China for the representatives of the seller to buy cigarettes and alcohol for the representatives of the buyer when the negotiations are complete. So Mr Ng bought about S$4,000 worth of cigarettes and alcohol for Mr Zhang.
Sounds like a good investment, right? It would have been, if the contract was legit. Unfortunately, it wasn’t. It was a scam. A week after Mr Ng got back to Singapore, Mr Zhang’s company still hadn’t sent over the deposit. Then Mr Zhang became completely uncontactable after 8th December.
You would think that Mr Ng would have learnt his lesson well. But a month later, a Chinese construction company contacted House of Seafood’s subsidiary in Guangzhou to buy some 6,000 boxes of crab. And guess what, despite the S$4,000 worth of lesson learnt just a month ago, House of Seafood fell prey to a similar scam again. This time, the loss was smaller at S$1,200.
Yes, scams abound in China.
Well, but so do opportunities.
After reading about Mr Ng’s experience, it would be tempting to stereotype everyone from China as out to scam and cheat other people. It would be tempting and easy to conclude that Chinese businesses are just out to get you, that they will never really give you a good deal. But that would be wrong.
China is a huge market. In many ways, they move very fast and are really advanced. In such a huge market, there are certainly good (as well as bad) deals to be made, there will be people who are genuine about doing business that is win-win for all involved. However, it will be hard work to be able to find those opportunities.
No shortcuts, you just got to spend the effort
One of the speakers at the Digital Outlook 2018 marketing symposium, Ms Ashley Galina Dudarenok, who has spent 12 years in China and Hong Kong and runs two business that focus on digital work in the Chinese markets, had some advice for the participants. She advised that anyone who wants to do business in China needs to immerse themselves in China. She said,
“You just have to learn more about China in order to do business in China. Go there, and don’t think you can learn the market by just sitting here in Singapore.”
“Go to China. Opening a rep office in Singapore doesn’t help. Going to Hong Kong and doing business with China from here is not enough. Just go to China.”
“Everytime I go there, I go like, ‘Lord, the market is here. The future is here in China.'”
So yes, there are not shortcuts. In order to know an overseas market well, especially if a big and complex one like China, you need to go to China, stay there for a while, get to know people there, build deep relationships. Only then can you stand chance of tapping in to the vast opportunities in the huge China market. But even then, be prepared to pay some “school fees”.
It might sound scary, but, given the size of the market, it would eventually be worth the shot.