Six steps for happy investing
John L. Chan has a six-step approach for successful investing in China. It was developed through extensive interviews with both successful and unsuccessful investors in the country.
Maintain management consistency. 'You can't effectively run a business if a new CEO is coming in every year,' he says. 'Some companies have had six general managers in seven years. Successful companies don't simply sack the guy [when problems arise].'
Be flexible and adaptable. 'A lot of people were importing sales models and expecting them to work in China,' he says. 'Don't apply the cookie cutter approach.'
Be patient and thorough. 'This is the biggest mistake people make,' he says. 'Being patient is not about sitting in your hotel room and waiting for the contract to be signed. It's waiting for the right moment to strike.'
Think win-win. 'Many people in the West think they are always meant to negotiate the best deal for their own company,' he says. '[In China] they are going to want to even it out. You've also got to know when to walk away. One of the things they were doing was wanting to get their foot in the door - even if it wasn't a good move for themselves. So the Chinese raised the stakes.'
Be detailed. 'Clarity prevents problems,' he says. 'It's more important in China because you're dealing with a different language and a different culture. A lot of arguments get down to misunderstandings. You should take minutes [of meetings]. You might want to send them to the other side so any misunderstandings can be clarified immediately.'
Maintain a healthy attitude. 'China at times will drive you crazy,' he says. 'It's important to learn to take crazy situations in your stride.'
Mr Chan's book is available in paperback from Amazon.com at US$35.