When doing business in Asia, often your partner/employee/agent does not speak English as a first language (if at all). Most of the time you will need to communicate through a translator. For day-to-day communications a loose translation of your message is sufficient. However, when it comes to entering into contracts, you have to ensure that not only the translation is correct, but it is legally sound.
English has been the dominant language for doing international business for so long that we tend to insist that a contract be in English and the other side adjust to our needs. As the global economy changes, this can be very bad practice for several reasons: (1) you are alienating a large segment of the market and losing out on potential business; (2) you are relying on the other side’s English abilities to be able to communicate effectively; and (3) under certain circumstances, it is just not legally allowed. Given the above, it is always a good idea to have your contracts translated into the native language, but be aware…
One of the most important things you can do as a businessman in Asia, is to find a capable, knowledgeable and trust worth translator. As I mentioned before, there are two important aspects to translating a document: (1) ensure the idea is translated accurately; and (2) make sure it is still legally enforceable after being translated.
Many translators can translate a document with great technical skills, but they do not grasp the underlying essence of the communication. You want to find a translator that will be able to take the idea in English and accurately recapture it in Chinese. The exact order and wording is not as important as the communication.
Lastly, you want to ensure that everything that is translated is still legally enforceable. Take for example a non-competition provision that lasts for 5 years with a liquidated damage provision. A translator can easily translate that into the native language, but only someone with legal knowledge can tell you that it would not be enforceable in China. Also, certain wording has very special meanings that may not translate directly. For example, the word “shall” states a requirement for one party to do something, verses the word “may”, which suggests some discretion. It would be imperative for your translator to make the distinction and capture it in the translated document.
So remember…get things translated and ensure it is translated well, then you won’t ever hear the phrase “lost in translation” again.
Wednesday, June 15, 2011
Friday, April 1, 2011
E-Commerce: the Growing Trend
When you think of Internet usage in China, government censorship is often the first thing that comes to mind. Look beyond politics though, to the possibility of doing business over the Web in China, and the potential is hard to ignore. A massive population with rapidly increasing access to high-speed connectivity has led to an e-commerce boom. In fact, recent studies show that China’s Internet economy reached 45.67 billion Yuan (approximately 7 billion USD) in the last quarter of 2010. Here’s what you need to know and some tips on getting involved.
The Chinese population has no qualms about buying goods online. In 2010, e-commerce was hailed as the fastest growing online activity in China. The number of online shoppers grew by 50 percent to 160 million within the year. Online sales grew by 370 percent to $78.79 billion. What does the future look like? With most Chinese consumers accessing the Internet through their mobile phones and phone companies steadily introducing new ways to conduct transactions on the go, the sky is the limit. So how can your business benefit?
Online business is a relatively cost-effective way to reach consumers directly. Not sure you’re ready to make a brick-and-mortar investment in China yet? Consider a much smaller initial investment in an online sales presence to get a feel for the marketplace. Already selling in China? Amp up your Web presence to give customers an additional way to interact with your business. Also, use online advertising as a cost-effective way to drive sales and build a brand presence. Online ad revenues in China are forecasted to reach $6.95 billion by 2012.
All in all, the exponential growth of online transactions in China creates a new avenue for U.S. businesses looking to enter the marketplace or further establish themselves. Make an online presence a key factor in your overall China business plan – another way to ensure the growth and success of your venture.
The Chinese population has no qualms about buying goods online. In 2010, e-commerce was hailed as the fastest growing online activity in China. The number of online shoppers grew by 50 percent to 160 million within the year. Online sales grew by 370 percent to $78.79 billion. What does the future look like? With most Chinese consumers accessing the Internet through their mobile phones and phone companies steadily introducing new ways to conduct transactions on the go, the sky is the limit. So how can your business benefit?
Online business is a relatively cost-effective way to reach consumers directly. Not sure you’re ready to make a brick-and-mortar investment in China yet? Consider a much smaller initial investment in an online sales presence to get a feel for the marketplace. Already selling in China? Amp up your Web presence to give customers an additional way to interact with your business. Also, use online advertising as a cost-effective way to drive sales and build a brand presence. Online ad revenues in China are forecasted to reach $6.95 billion by 2012.
All in all, the exponential growth of online transactions in China creates a new avenue for U.S. businesses looking to enter the marketplace or further establish themselves. Make an online presence a key factor in your overall China business plan – another way to ensure the growth and success of your venture.
Tuesday, January 18, 2011
The Chinese New Year (Spring Festival) is coming up (Feb 3rd) and many businesses are thanking their Chinese partners and clients for a year of fruitful collaboration by sending a thoughtful gift. Here are some things to keep in mind.
1. Avoid cultural pitfalls or make your gift even more special by taking other traditions into account. Consider wrapping your gift in red gift wrap. The color is considered lucky by the Chinese and thus would give your gift extra authenticity. Do your research to avoid certain items that are considered unlucky. For instance, do not give knives or scissors as they symbolize breaking a relationship. Also avoid clocks, watches or anything in sets of four (the number is unlucky). Six, eight and nine are a lucky numbers.
2. Whenever giving a gift to a foreign partner, you should always be aware of the Foreign Corrupt Practices Act (FCPA). The FCPA forbids anyone from paying a bribe to a foreign official, no matter how small the monetary value of the bribe is. In China, this is especially problematic. Many Chinese companies are state-owned enterprises. Therefore their directors and officers would be considered foreign officials. In these scenarios, only give gifts to individuals where you are absolutely sure the receiver will see the gift as a gesture of goodwill.
All in all, informed and culturally-sensitive gift-giving is great way to forge stronger relationships with key Chinese contacts and position your business for even greater success in 2011.
1. Avoid cultural pitfalls or make your gift even more special by taking other traditions into account. Consider wrapping your gift in red gift wrap. The color is considered lucky by the Chinese and thus would give your gift extra authenticity. Do your research to avoid certain items that are considered unlucky. For instance, do not give knives or scissors as they symbolize breaking a relationship. Also avoid clocks, watches or anything in sets of four (the number is unlucky). Six, eight and nine are a lucky numbers.
2. Whenever giving a gift to a foreign partner, you should always be aware of the Foreign Corrupt Practices Act (FCPA). The FCPA forbids anyone from paying a bribe to a foreign official, no matter how small the monetary value of the bribe is. In China, this is especially problematic. Many Chinese companies are state-owned enterprises. Therefore their directors and officers would be considered foreign officials. In these scenarios, only give gifts to individuals where you are absolutely sure the receiver will see the gift as a gesture of goodwill.
All in all, informed and culturally-sensitive gift-giving is great way to forge stronger relationships with key Chinese contacts and position your business for even greater success in 2011.
Friday, January 7, 2011
Health Care Investment in China
In 2009, the Chinese government announced that health care reform would be a major component of its $586 billion stimulus package. It’s a clear sign of a market opening up and investment opportunities abound. Here’s a quick look at the Chinese health care system today, how it’s poised to change and where some of the opportunities might be.
People Change
Average life expectancy in China has increased by nearly three decades since 1949. There’s no question that where people live, how people live and the expectations people have of the nation’s health care infrastructure are rapidly changing. This means increasing demand for medical services aimed at an aging population, including both formal facilities like clinics or hospitals as well as the options for home-based care. As a direct result, China's medical devices market is estimated to almost double in size between 2006 and 2014 to $28 billion a year. For example, according to the China Market Research Group, the number of cardiac patients in China is growing at a 20-30% annual rate, with the market for cardiovascular stents increasing by 40% annually. As many developed nations work their way out of economic slowdown and cut back on expenditures in this area, the Chinese market poses a real opportunity.
The Gaps
As per the Chinese stimulus plan, nearly 90% of China's citizens are now covered by a universal health care system. Health-care facilities throughout the country are being upgraded, including the construction of 30,000 hospitals, clinics, and care centers. Much of the new development is focused on the rural areas of China which have lagged far behind major cities in providing access health care resources. U.S. companies that have the ability to work with smaller localities and offer products or services aimed at growing health care from a grassroots level have the advantage.
Call for Quality
A growing middle class in China means a demand for more than the basic level of service provided by the government. Statistics from the Chinese Ministry of Health show that the personal spending on medical services doubled from 21.2% in 1980 to 45.2% in 2007. What are sophisticated Chinese health care consumers asking for? A recent China Market Research Group survey of doctors, hospital staff and patients found a clear preference for foreign products. The majority of respondents said that they were willing to pay 20% or more for Western brands because they believed them to be more reliable and of higher quality.
All of the above means there is currently a monumental opportunity for U.S.-based companies looking to become players in the Chinese health care arena, especially since now foreign investment is allowed in the field.
People Change
Average life expectancy in China has increased by nearly three decades since 1949. There’s no question that where people live, how people live and the expectations people have of the nation’s health care infrastructure are rapidly changing. This means increasing demand for medical services aimed at an aging population, including both formal facilities like clinics or hospitals as well as the options for home-based care. As a direct result, China's medical devices market is estimated to almost double in size between 2006 and 2014 to $28 billion a year. For example, according to the China Market Research Group, the number of cardiac patients in China is growing at a 20-30% annual rate, with the market for cardiovascular stents increasing by 40% annually. As many developed nations work their way out of economic slowdown and cut back on expenditures in this area, the Chinese market poses a real opportunity.
The Gaps
As per the Chinese stimulus plan, nearly 90% of China's citizens are now covered by a universal health care system. Health-care facilities throughout the country are being upgraded, including the construction of 30,000 hospitals, clinics, and care centers. Much of the new development is focused on the rural areas of China which have lagged far behind major cities in providing access health care resources. U.S. companies that have the ability to work with smaller localities and offer products or services aimed at growing health care from a grassroots level have the advantage.
Call for Quality
A growing middle class in China means a demand for more than the basic level of service provided by the government. Statistics from the Chinese Ministry of Health show that the personal spending on medical services doubled from 21.2% in 1980 to 45.2% in 2007. What are sophisticated Chinese health care consumers asking for? A recent China Market Research Group survey of doctors, hospital staff and patients found a clear preference for foreign products. The majority of respondents said that they were willing to pay 20% or more for Western brands because they believed them to be more reliable and of higher quality.
All of the above means there is currently a monumental opportunity for U.S.-based companies looking to become players in the Chinese health care arena, especially since now foreign investment is allowed in the field.
Tuesday, September 14, 2010
Chinese Consumer Trends
Chinese consumer mindsets are shifting. Thinking of entering the Chinese market with your product or service? Here are some trends to keep an eye on.
Consumer Confidence: Savings Rate
In times of economic crisis, the unusually high savings rate of Chinese citizens, sometimes as high as 50 percent, has been both a blessing and a curse. On one hand, the Chinese government didn’t have to contend with waves of foreclosures or bankruptcies brought on by an overleveraged society. On the other hand, the government’s encouragement for citizens to spend more to buoy a slowing economy also appeared to fall on deaf ears. Some appeared to take to heart though. A recent China Market Research Group survey of 5,000 Chinese below the age of 32 in Shanghai found a savings rate of zero among this group. This finding speaks volumes on ambitiousness and consumer confidence among the Chinese youth.
Staying Home: Luxury Sales in Interior China
As minimum wages rise throughout China, more young professionals are staying in their hometowns instead of venturing to the big coastal cities to seek their fortunes. This has created unprecedented markets for luxury goods in unexpected places. In fact, according to recent studies, the fastest luxury sales are in China’s second and third-tier cities like Chengdu and Harbin. Citizens here are gaining buying power, but not necessarily the ability to shop abroad for better prices like the affluent populations of Shanghai, Beijing and Hong Kong. Take advantage of concentrated audience, tax incentives and lower real estate costs by entering the Chinese market through one of these regions.
Who’s Shopping? Mom and the Kids
With men traditionally at the head of the household, marketing for everything from soap to cars has focused on dad. New studies are finding though, that mom and the kids are quickly gaining influence. With a more educated and professionally employed female workforce than ever before, it’s no surprise that an increasing number if Chinese households, especially in the big cities, are reporting finances controlled by women. Add to that the extended childhood among China’s upper classes, where young adults in their 20’s can expect mom and dad not only to provide the bare necessities, but also cars and computers. Have goods or services aimed at one of these audiences? This is your opportunity to get in at the ground level of a rapidly growing market.
Consumer Confidence: Savings Rate
In times of economic crisis, the unusually high savings rate of Chinese citizens, sometimes as high as 50 percent, has been both a blessing and a curse. On one hand, the Chinese government didn’t have to contend with waves of foreclosures or bankruptcies brought on by an overleveraged society. On the other hand, the government’s encouragement for citizens to spend more to buoy a slowing economy also appeared to fall on deaf ears. Some appeared to take to heart though. A recent China Market Research Group survey of 5,000 Chinese below the age of 32 in Shanghai found a savings rate of zero among this group. This finding speaks volumes on ambitiousness and consumer confidence among the Chinese youth.
Staying Home: Luxury Sales in Interior China
As minimum wages rise throughout China, more young professionals are staying in their hometowns instead of venturing to the big coastal cities to seek their fortunes. This has created unprecedented markets for luxury goods in unexpected places. In fact, according to recent studies, the fastest luxury sales are in China’s second and third-tier cities like Chengdu and Harbin. Citizens here are gaining buying power, but not necessarily the ability to shop abroad for better prices like the affluent populations of Shanghai, Beijing and Hong Kong. Take advantage of concentrated audience, tax incentives and lower real estate costs by entering the Chinese market through one of these regions.
Who’s Shopping? Mom and the Kids
With men traditionally at the head of the household, marketing for everything from soap to cars has focused on dad. New studies are finding though, that mom and the kids are quickly gaining influence. With a more educated and professionally employed female workforce than ever before, it’s no surprise that an increasing number if Chinese households, especially in the big cities, are reporting finances controlled by women. Add to that the extended childhood among China’s upper classes, where young adults in their 20’s can expect mom and dad not only to provide the bare necessities, but also cars and computers. Have goods or services aimed at one of these audiences? This is your opportunity to get in at the ground level of a rapidly growing market.
Friday, July 23, 2010
Chinese Currency Reforms
For years, the U.S. has raised the issue that China has been unfairly manipulating its currency to gain an edge for its export-driven economy. Last month, ahead of the G20 Summit, China announced that it would allow for more exchange rate flexibility in its currency, the RMB, which led to a slight appreciation. China has indicated that the appreciation will be highly controlled and will not be allowed to fluctuate greatly, leaving many to believe that the RMB is still greatly undervalued.
The most significant result of the appreciation of the RMB is that it will put a strain on Chinese exporters and those businesses that rely on Chinese goods (e.g. Wal-Mart), ultimately leading to increased prices for American consumers. Even with only a slight 0.5% increase in June, many Chinese exporters (including those foreign companies that manufacture in China) have felt a squeeze on their profits.
The good news is that the rise in value of the RMB will open up many new opportunities for American businesses. Chinese consumers will have more buying power and will demand more foreign goods. The consumer luxury goods (automobiles, cosmetics, high-end retail) industry will be one of the largest benefactors, a demand U.S. companies are well-positioned to meet. In fact, both GM and Ford have both reported record sales this year and plan on expanding their operations in China. Chinese consumerism will drive the development and expansion of other industries as well.
Also, for those businesses with RMB assets in China, the rise in value of the RMB will also signal a rise in the value of those assets. Therefore, investments into China will likely appreciate in value along with the appreciation of the RMB.
It is inevitable that the RMB will appreciate in value; the only variables are when and by how much. For U.S. businesses, the key is to have a strategy in place so you are ready to take advantage of the opportunity.
The most significant result of the appreciation of the RMB is that it will put a strain on Chinese exporters and those businesses that rely on Chinese goods (e.g. Wal-Mart), ultimately leading to increased prices for American consumers. Even with only a slight 0.5% increase in June, many Chinese exporters (including those foreign companies that manufacture in China) have felt a squeeze on their profits.
The good news is that the rise in value of the RMB will open up many new opportunities for American businesses. Chinese consumers will have more buying power and will demand more foreign goods. The consumer luxury goods (automobiles, cosmetics, high-end retail) industry will be one of the largest benefactors, a demand U.S. companies are well-positioned to meet. In fact, both GM and Ford have both reported record sales this year and plan on expanding their operations in China. Chinese consumerism will drive the development and expansion of other industries as well.
Also, for those businesses with RMB assets in China, the rise in value of the RMB will also signal a rise in the value of those assets. Therefore, investments into China will likely appreciate in value along with the appreciation of the RMB.
It is inevitable that the RMB will appreciate in value; the only variables are when and by how much. For U.S. businesses, the key is to have a strategy in place so you are ready to take advantage of the opportunity.
Tuesday, June 15, 2010
Chinese Monetary Reforms
The Chinese government has been making a number of changes in the financial sector that have the potential to be very beneficial to foreign companies. Foreign companies now have unprecedented access to Chinese stock exchanges, which means the ability to tap into a great source of capital not previously available. Regulatory changes have allowed Chinese banks to become more sophisticated in their products and are better able to serve more complicated deals. Reforms have also made it possible for foreign companies to use the Renminbi (RMB, the Chinese currency) in cross border trade settlements. For those making a long term investment in China, using the RMB in account settlements has the potential for greater return on investment as the value of the currency increases.
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