Can the Chinese be trusted?
When doing business in China or anywhere else in the world, you have to be careful and well-prepared. That seems to be a very logical precondition, but too often we find that Western companies are being cheated by their Chinese business partners. In one of our recent blogs we already told the story of one of our customers who became the victim of trademark squatting, which means that a Chinese company registered the company’s trademark before the Belgian company even started doing business in China. Please check here for the whole story. Unfortunately there are a lot of similar stories we came across over the past years.
Being in this business for so many years, I can honestly say that, when you plan on doing business in China, you should expect to be cheated. As an example, if you are doing a due diligence of a Western company, you can fairly assume that any documents you need to check are genuine and correct, unless there is evidence that they are not. In China it is the opposite: if you are doing a due diligence, you should assume that the documents you have are not correct, unless someone can proof to you that they are genuine.
Another example: once you are successful in China, you should already assume that there will be someone who will copy your product. Or like my father used to say: “The best (and probably only way) to not be copied in China, is to stay away. And even then you are not sure…”
So, based on the above, you may conclude: Chinese cannot be trusted.
However, if you ask me, things are a little more complicated than that. Yes, even if you are dealing with a Chinese business partner, whom you know very well, you may still be cheated. True. And it is also a fact that if Chinese people see an opportunity, they will take it right away, even if that means that they have to do something which – according to our common business practices – is a little out of line.
But here I have to defend the Chinese side. Too often I see Western companies sign contracts with Chinese business partners or take avoidable risks without even having taken the time to check whether their business partner is legitimate or without having spent enough time to investigate the market and the viability of the selected business model.
There are simple and cheap ways to check whether your Chinese business partner is legitimate. Just by doing an online search on the AIC database or by taking some simple actions one can already achieve a lot. Or by asking help from government agencies, chambers of commerce, consultants or other companies active in China, a lot of problems can be prevented from the start.
In any case, it is far too easy to always blame the Chinese side whenever something goes wrong in China. More often than not I have experienced that the main reason for the failure of a project in China is due to a lack of understanding of the Chinese market or business culture and a poor preparation on the part of the Western side.
If you are looking for more information about how to do background checks of your Chinese business partner, or for any other information, we welcome you to contact us.