How a Canadian startup won in China – part 1
This blog is the first in a two-part series on doing business in China. Part 2 will be published tomorrow.
“From the beginning, we decided to create a disruptive technology for the emerging market. We are not the first to think about it, but we are among the few who did it,” said Dana Fox, CEO of ClevrU Corporation.
In February, ClevrU signed “monster” deals with the two biggest telecommunications companies in China—China Telecom and Unicom—in the presence of Prime Minister Stephen Harper. ClevrU and China Telecom will work together to develop ClevrU’s mobile online education market in China and in 50 other countries supported by Telecom. As a two-year-old startup in the Waterloo area, how did ClevrU accomplish such success in China?
I had the chance to interview Dana Fox and learn about his experience entering the Chinese market. I’ve noted below how ClevrU made their successful leap into the Chinese market.
Get the learning attitude
Many things are different in China. But if something in China works in a way that would seem unusual in North America, don’t question whether it’s right. Instead, ask yourself “why” and try to learn China’s way of doing business, which has developed over the past 2,000 years.
In China, people work extremely hard and they are very productive. To win in China, you must do the same: work hard to create a product with great value, at the best price, and find the best way to do business. The good news is, if you can succeed in China, you can succeed almost anywhere in the world!
Building trust—the key to doing business in China
This is the golden rule in China: you don’t get invited to work with business associates unless you are trusted. Chinese business people put a lot of effort into building a business associate circle, so they are very guarded when it comes to introducing anyone new into it—especially since your actions will reflect on them and the value they bring to the circle. But if you gain someone’s trust, it’s like you become part of the family, and you will be invited to access the business resources in the circle. ClevrU was connected with China Telecom and Unicom through such a network.
In 2011, the president of Wilfrid Laurier University, Dr. Max Blouw, introduced Dana to a friend, Dr. Francis Pang, who runs an international school in Beijing. After an engaging conversation, Peng promised to introduce Dana to some friends and business associates in his network, as a courtesy and a sign of friendship. Through that network, ClevrU connected with the wireless carriers in China.
Relationships are more important than contracts
North American companies rely on contracts to reinforce business arrangements, but Chinese companies value business relationships as much as, if not more than, contracts. When you try to conquer the Chinese market, spending money for trips to China to build and understand relationships would be more rewarding than spending money on expensive lawyers to draft contracts.
After ClevrU connected with the Chinese wireless carrier companies, Dana returned to China about eight times over nine months, trying to better understand their Chinese partners’ businesses and figure out how to present an application that would add value to their business. ClevrU’s resulting proposal was agreed on by both parties and became the business deal witnessed by the prime minister.
Be insistent and durable
Sometimes Chinese companies “test” you to see if you are worthy of a business relationship. For example, they may request something that could be challenging for your business to offer. They want to know how you handle challenges: do you scream, do you give up and go away, or do you come back with a solution?
“I wouldn’t look at it negatively,” Dana said. “Rather, I’d say it is a positive thing, since they try to understand what the edges of this relationship are, and how far we can go before we hit the edge. More importantly, what happens when we hit the edge?”
The Chinese market is competitive. Chinese companies are looking for a long-term partner who will fight battles hand-in-hand with them. They will be impressed if you can work through challenges intelligently and continue to come back.
Stay tuned for part 2 of this blog, to be posted tomorrow.