From academic Wilfried Vanhonacker's point of view, China is a contradiction. It has the world's largest population but suffers from a desperate shortage of managerial talent. It has vast untapped markets, but most foreign investors get taken to the cleaners. It has existed under communism for half a century, and yet Shanghai has all the cosmopolitan flavour of New York. Making sense of this vast nation is no easy task at the best of times, and it is especially difficult when your job is to assess how business works and present those lessons to executive MBA students looking for answers. For Professor Vanhonacker, the challenge of producing business school material from the trenches comes with the job. The academic, who lectures on China business in the Kellogg-HKUST EMBA programme, has lived in Hong Kong and China for more than 14 years and is directly involved with the mainland. He holds a teaching post at the Chinese European International Business School, which he helped establish in Shanghai in 1993, and where he was dean from 2000 to last year. A Putonghua speaker who travels frequently to China (he has a residence in Shanghai), Professor Vanhonacker has the advantage of knowing what is really going on in the mainland. The first thing you should know on entering the China market, he says, is that most foreign businesses fail initially. Second, you should know that there is a right approach and a wrong one. United States giant Coca-Cola did it the right way in 1982 when it set up partnerships with local companies, handing over the ownership of bottling, distribution and even trademark rights. Allowing local partners to share in the prosperity contributed to an environment of trust and allowed Coca-Cola the kind of smooth landing most foreign companies can only dream of. The result was the rapid development of a national distribution network and a headstart on their competitors. Coca-Cola is now available in most provinces in China. This is a considerable achievement, says Professor Vanhonacker, considering Pepsi has largely fumbled the ball, outselling Coke in only two provinces. Another example of a company that did it the wrong way is American software giant Microsoft. The company made just about every classic mistake in the book, says Professor Vonhonacker, noting it had assumed a fortress-like mentality. Before entering the market, he says, companies should do two things. They should ask themselves why they are going into China, and they should know exactly what has to be done to get ahead. 'There are people who say you should forget what you do anywhere else, because China is so different. My argument is that it is not that different. You must get the skills, resources and capabilities, and you will need some extras. But instead of starting with a clean slate, take your rule book with you and just add some pages.' At the end of the day, companies should be prepared to take small steps to achieve their goals. This can be a vastly different approach to the Western mentality, which favours entering new markets in a blaze of glory. Professor Vanhonacker completed his PhD studies in mathematical statistics at Purdue University in the United States. He applied these techniques to consumer research, an area he lectures on for the School of Business and Management at HKUST. Asked what he sees as the best opportunities for foreign ventures in China, he says there is still a frontier in supply chain management, retail and most service-sector industries.