10 reasons why some businesses are NOT successful in the Chinese market

There are millions of smart business ideas -  millions of entrepreneurs

setting up companies to deliver a brilliant product or service. China

has more than its fair share of exciting startups, which means the

culture here is ripe for business success. Yet we hear from many

companies who have successfully set up their business but have

become frustrated by their inability to grow. For one reason or

another their progress has slowed, and they are looking for something

to kick-start them towards expansion. In a surprising number of cases, it is the business owner / overseas office who is responsible for the stagnation of the company. The inspiration, single-mindedness, perseverance and attention to detail that breathed life into the business in the first place can become the millstone that drags it down. It’s important, then, for all companies to be aware of the traits within themselves that can lead to the arrested development of their enterprise.

The deadly leadership traits that stifle business growth

In this article I have identified 10 common problems, which, individually or combined, can keep a business forever knocking on the door of expansion but never being allowed in.


1. Refusal to adapt:
If you’ve launched your business in China on the strength of one brilliant idea and the launch has been successful, there’s a tendency to feel reluctant to make any changes to your concept in case you throw the whole thing off the rails. This is extremely common in China, whereby companies replicate their business models, services and products with the assumption it will fit in the Chinese market.  ‘If it isn’t broke, don’t fix it,’ as the saying goes. But a business model that was well-suited to a smaller market is unlikely to be fit for bigger things without some degree of adaptation – particularly in a market as large, dynamic and culturally-different as China. If your gut instinct is telling you that change is required, or if you’re getting the same message from your team, it’s important that you listen. Open your mind to the possibilities that changes to your business model can bring and be prepared to wave goodbye to your original concept. It’s got you this far – but is it time to move on?

2. Too much involvement in the detail:
It’s quite natural for anyone who has gone through the rigors of launching a business to be somewhat obsessed with the details and to feel compelled to play a hands-on role in ensuring the work continues to be done to the same standard as when you launched. These are noble sentiments to have, particularly in a market such as China, where everything is foreign, but they can be restrictive. As your business becomes more established, it’s important to spend more time working “on” the business instead of “in” the business. By this perspective it may be more advantageous for you to outsource then keep everything in-house.  A good analogy is a ship. When you launch you tend to spend most of your time in the engine room, keeping the boilers stoked and making sure that the ship keeps moving forward. But before very long you need to get up on the bridge and plot your course. The farther your ship sails into uncharted waters, the more time you need to spend on the bridge, planning and plotting and making sure you avoid the rocks and icebergs.

3. Insufficient care when hiring:
Every successful company, agrees on one thing: a business is only as good as its people. Do your employees have the talent, creativity and inclination to take your business forward? If not, it’s time you started hiring people who do. Hiring in China does not sit comfortably with a lot of business people, most of whom start out on their own and regard employing staff as a necessary evil, rather than an opportunity for the business to grow in a way that they never envisaged. If hiring doesn’t come naturally to you, seek help. There are plenty of recruitment experts out there who can help you find people who truly deserve to be part of your great adventure.

4. Number blindness:
You can’t grow without money. You need money in the bank and you need a sound financial plan. For this you need a good Chief Financial Officer (CFO) in your headquarters, who can guide you in the budgeting and controlling. If you’ve been doing the figures yourself up to this point in China, it’s time to hand over the books to an expert and concentrate on steering that ship. A good CFO in China could be your most important hire of all (and don’t forget you may even want to outsource the role to a team of experts) – not just a bean counter but a visionary who can interpret your figures, tell you where the business’ strengths and weaknesses lie and use the data to help you plan your future course.

5. Market assumptions:
Most businesses launch with some idea of who their customers might be and who their competitors are but rarely do in-depth market research. They assume they know without carrying out thorough research. When the time for growth arrives, you can’t afford to go to market with a scattergun approach. You need to be very focused and that means knowing your Chinese customers in detail – right down to what they’re talking about on social media. Similarly, the more you know about your competitors in China, the more you will know about your own business and what makes it different. It’s this difference that will be your route to success.

6. Control freak leadership:
Growth doesn’t come from a spreadsheet, it comes from the whole culture of the company. You need your whole team to be aligned and energized towards the same goal as you, and that means sharing a bit of your power. You may have kept a tight hold of the reins as you launched but now it’s time to let go and delegate. Empower your staff in China and encourage their creativity.

7. Marketing bias:
Does your company look like something you would expect to find in the big business world? Or does it look inescapably small? Branding and marketing are essential for growth. You might love that logo your employee knocked up when you launched but is it really going to cut it among the corporates? If not, swallow your pride and invest in a rebrand. From your business cards to your website and beyond, the image your business projects will have a major bearing on its chances of staying afloat in deeper waters. Be prepared, in China, to spend a significant chunk of your growth budget on marketing. If you want to be taken seriously among the big hitters, you need to look like a big hitter yourself. The time for keeping a low profile is past.

8. Cultural Diversity:
A notoriously tricky one for some entrepreneurs to swallow is the need to change their own personal image when entering a new market which has a different business approach due to cultural differences. Just as the image of the business needs to be suitable to the Chinese market you’re moving into, the same applies to you as its figurehead. For a lot of business owners, this is a natural progression, but many business owners never consider their own role in how the business is perceived, believing it’s all about the business, not about them. This is folly. As you expand into China, people will take an increasing interest in who you are and what you know. You can satisfy their interest by networking, blogging and putting yourself up for public speaking engagements. This will not only showcase you as an expert in your field, it will reflect very favorably on the business and cement its perception as a big player.

9. Lack of vision:
What’s the plan? And is everyone on board? A common obstacle to business growth in China is the lack of a collective vision as to what you are trying to achieve. Without this, you will not get everyone pulling in the same direction, even if they want to. Take the time to set down your mission for the Chinese market, vision and values and involve your whole team in the process. Let them share their own view of the business’ future – “sharing is caring” and will allow you to obtain insights into the Chinese market place as well. Perhaps there are possibilities you haven’t envisaged. With complete buy-in from all your employees, you’ll be amazed how fast your company can steam ahead to bigger and better things.

10. Fear:
Business owners are courageous. They must be. It takes courage and an appetite for risk to get any new venture off the ground. But everyone has their limit and sometimes it’s the fear of sailing into shark-infested waters that holds entrepreneurs back from doing the things they know they need to do to grow. But you don’t have to do this alone. Help is at hand. Whatever sector you’re in, there are consultants, service providers, headhunters - experts with experience of the Chinese market and the waters you’re moving into, who can advise you, share their experience and give you the confidence you need. Don’t be afraid to pay for them and use them.

Finally, if you’re feeling frustrated by the inability to grow your business, ask yourself honestly whether any of these traits apply to you. If they do, make it part of your business strategy to address them. And make use of the vast resource of experience and advice that’s out there waiting to help you. Remember, the bigger your business grows, the more people benefit.

To read the PDF version click here

DISCLAIMER: All information in this article is verified to the best of our ability and is assumed to be correct at time of release; however, Woodburn Accountants & Advisors does not accept responsibility for any losses arising from reliance on the information provided within. The information provided is for general guidance and does not replace specialized advice.



© 2020 Woodburn Accountants & Advisors. All Rights Reserved. Privacy Policy