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Business opportunities

How to succeed in Chinese business

China is the world’s second largest economy, and the possibilities are endless if you know how to exploit them. We’ll give you some tips.

China is the world’s second largest economy, and the possibilities are endless if you know how to exploit them. We’ll give you some tips.

China is the world’s largest shipbuilding nation. The largest Norwegian companies already established in the country are mostly in the maritime and offshore industry. A number of smaller Norwegian companies also supply niche products in the sector.

“We certainly have room for more Norwegian companies here. There are many opportunities for Norwegian companies in China, and in a wide range of sectors, such as shipbuilding and maritime, offshore, aquaculture and marine biotechnology, agricultural technology, water and waste, but also in e-commerce, medical technology, educational technology, financial technology, food safety, clean energy and creative industries,” says Knut R. Sørlie, the head of Innovation Norway’s Beijing office.

There are currently around 200 Norwegian companies in China, and most are optimistic about the market’s prospects. It’s important to be aware of the many pitfalls nonetheless.

“Norwegians often have an unrealistic view of IPR value (intellectual property rights), and think they can be protected in the same was as in Norway. Many also believe that a written agreement has the same legal and cultural significance as in Norway, which is not the case,” says Pål Bråthen, head of the Shanghai office.

It is also crucial to understand the concepts of “guanxi” (building and maintaining good relationships) and “loss of face” as well as other cultural aspects of relationship-building in China.

Good advice to Norwegian companies looking towards China:

  1. You have to really want it: China is a demanding market. For small and medium-sized businesses, investing in China requires the full attention of senior management.
  2. You must have something unique: Research shows that almost no foreign companies beat the Chinese on their home turf in industries they know. But demand for western products is strong.
  3. You must build trust: The Chinese expect that you and they will learn to trust each other, and this takes time. The process is likely to include round after round of letters of intent, interpretation, dinner and other social interaction. Being present in China is often necessary to build up such trust.
  4. Local presence is required: One of most important pieces of advice that Innovation Norway in China gives its customers concerns the importance of being present locally. Personal relationships are the key.
  5. Be wary of corruption challenges.
  6. You must know the culture: There are many challenges on this front. One concerns the concept of “No”. Many western businesspeople have spent much time and effort on what they thought were important contacts and opportunities in China, while the Chinese party was trying as politely as possible to back away. Chinese tradition does not permit “loss of face” for a counterparty, as that would reflect poorly on both sides. A clear “No” is therefore hard to give.
  7. Reference check: Ask for references from previous employment, and check them!
  8. Think IPR and trademark registration.

Source: Innovation Norway

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