Doing Business with China

Unfamiliarity with market differences often causes misunderstanding of the market and/or misinterpretation of the business environment, which may eventually lead to wrong decisions. It is important to note differences in the environment where the research is carried out. The following are generalizations of some of the major differences in the Chinese research environment. However, it is always advisable for researchers to analyse the research environment on a case by case basis before embarking on research planning and design.

Differences in the basic data

As is true in other countries , the statistical system in China has its own unique features. Some of the statistical information is collected and prepared in accordance with international standards, such as the Customs Statistics, which follows the Harmonious System (HS). Many other statistics still resemble the characteristics of the planned economy, although great efforts have been made by the statistical authority to improve the statistical system.

The State Statistical Bureau publishes a series of official statistics, including the most authoritative China Statistical Yearbook . But these tend to be more macro than micro compared with the statistics compiled by different ministries. In some instances, there are also discrepancies between the statistics of state statistical publications and ministerial releases. Even ministerial releases on industries can be incomplete because enterprises of the same or similar nature may fall under different ministries. In some cases, statistics on certain industries simply do not exist.

Differences in reporting systems

While the incompleteness of the statistical system can be attributed to problems such as outdated classification and obsolete collection methods , complicated reporting systems are also at fault. Normally, industrial statistics are reported in a bottom-up manner: ie enterprises or business entities report to their supervising departments at city/county levels, who will then report to higher level authorities such as provincial departments. The statistics will be relayed to central government departments, such as ministries. Departments in cities with separate planning from the central government are independent of the provincial departments and report directly to the corresponding departments at central levels. As government departments at different levels may have their own statistical requirements for reporting purposes, the statistics kept at different levels may also vary. For example, the central departments may only be interested in knowing the performances of the enterprises at county level and above, while a city or county level department will also collect information on lower level enterprises, such as village enterprises.

Differences in the social environment

• Market research organizations tend to group people/ families into different social classes for particular research purposes. In China, the doctrine of equality among different professions has determined that there is no standardized classification of social class;

• Moreover, the socialist welfare system has also determined that employers provide housing for their employees . Although this is being reformed, the residents in a building tend to be the staff of the same work unit and may share some common characteristics;

• Increased security-consciousness and awareness of privacy have made in-home interviews more difficult. Telephone owners still represent higher income households and mail questionnaires may not find their way to targeted respondents because personal details such as home addresses are not easily available.

• Reported household expenditure on some commodities, such as soft drinks, beer, staple food (ie rice or wheat flour), edible oil, and tea etc may not reflect the actual consumption because some of these commodities are provided to employees of state-owned enterprises, government organizations and business corporations as a part of the welfare package and they are not counted as out-of-pocket expenditure.

Differences in reactions and length of interviews

The novelty of the structured questionnaire may arouse interest in the interviewee, but sophisticated and prolonged questioning may lead to a loss of interest or perfunctory answers. In most cases, respondents of a consumer study are open in their comments.

In industrial research, respondents tend to be very careful when giving comments. Respondents are easily alerted when being asked questions which they regard as probing into their commercial secrets. An offer to share the research findings at a later date is not regarded as a recompense for giving out information.

In qualitative research, in-depth interviews with respondents in senior positions will normally take longer than planned. The expense of being polite and showing respect, which is essential when carrying out in-depth interviews in China, is to allow divergence . In interactive focus groups, people with dominant personalities tend to lead opinion and they should be carefully managed.

A local research organization tends to have a better understanding of the local market and will be able to adapt to their client's research requirements, particularly when the research organization has working experience with and good understanding of the information needs of foreign companies.