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Cultural understanding vital for trade success in China

NEW opportunities to do business with China may be wasted if companies do not acquire an understanding of Chinese history and culture.

Strategy, Management and Organisation senior fellow at Singapore’s Nanyang Technology University, Dr Seet Lip Chai, says China’s entry to the World Trade Organisation, to be formally ratified this month, will be complete early next year, and will open up market access to the extent the country’s GDP will grow by 2.94 per cent in the first year. The Chinese economy is less reliant on imports, and hence expected to continue to grow at about 7 per cent per annum in the current global downturn.

With economists predicting that Australia, also, will not slide into recession, the opportunity for increased successful trade between the countries is significant.

But Dr Seet says companies will lose money if they do not understand the cultural and historical basis of doing business in China.

Some large international organisations, in the pharmaceutical, motor vehicle and communications sectors have done well out of their Chinese bases, but Dr Seet warns they are the successful few and it is easy to lose money trying to do business there.

Companies who want to be successful in China will need deep pockets and a long operational time-frame, he says.

BHP Steel is one of the success stories, with manufacturing plants in Shanghai and Guangzhou. The company has recently supplied steel cladding and purlins for the $2 billion expansion of Beijing Airport.

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