Foreign companies should do their homework before they chase profits in China's western region, said a German businessman with seven-year's experience of working in the country.
They should take their time when compiling market analysis and feasibility studies, said Helmut Schneider, general manager of Messer China.
"Don't rush it as you gain nothing that way. Be sure you know what the market is, and then invest in line with international standards of competitiveness and professionalism," he said.
As early as 1995, the Frankfurt-based Messer Group entered the western China market by setting up SMC Asia Gas Systems to manufacture gas production equipment.
There are now altogether six Messer enterprises in the western region, with a total investment of more than US$87 million. These include three enterprises in Sichuan Province, two in Yunnan Province and one in Hunan Province.
"We encountered many unexpected difficulties in the initial phase of our investment in Sichuan, which is where we launched our mainland operations first. But great improvements have been made in both infrastructure and supplementary services since then," he said.
Covering a vast area of land in China, the western region is rich in natural resources and human labour and has tremendous market potential, he said.
He believed the strategy of the Chinese Government for developing the western region will offer more opportunities for foreign investors in the future.
He added business opportunities must be surrounded and supported by an environment of stable and predictable government, legislation and law enforcement.
He said the central and the local government should be consistent with their messages, trying to understand what the real attraction to foreign investors might be.
"Your audience is not the world of superlatives that we encounter so often in public announcements, but the world of facts and interests," he said.
"Be focused and don't spread the message to the wind. Talk to target groups like the chambers of commerce or the industry associations. Use the embassies abroad for targeted messages."
During Schneider's seven-year stay on the Chinese mainland, he has taken senior executive positions in two leading multinational companies, first as the general manager of Hoechst (China) Investment Co Ltd from 1995 to 1997 and then as the general manager of Messer China group.
Messer China's business has been growing from a very small base to its current total of 14 companies with a total investment of US$180 million and 1,400 Chinese employees.
Messer has companies in Shanghai and Tianjin, Zhejiang, Jiangsu, Sichuan, Yunnan, Guangdong, Hunan and Jilin provinces. They serve various markets such as electronics, petrochemical, metallurgy, cutting and welding and environmental protection.
He acknowledged there were some cultural conflicts when he tried to implement the management system of the west to the organization whose overwhelming majority of staff members are Chinese.
"The important point is not to deny that problems exist, but to be aware of them and try to avoid or at least anticipate them," he said.
"It is very important to have an early warning system, an antenna for things going wrong."
He said problems occur between joint venture partners in many cases.
"One of the first little word games that I learned here was about joint venture partners being like a married couple: same bed, but different dreams. That's so very true and encapsulates a cultural problem," he said.
Cultural problems also occur frequently between foreign managers and the Chinese staff.
"That cannot be fully ruled out, but I think we have made a lot of progress in our company, mainly through team experience and learning from mistakes," he said.
The worst problems between foreigners and local partners are those which come up when there is no awareness of the existence of cultural differences. Communication can fail completely and leave frustration and bitterness, he said.
Recognizing cultural differences does not mean giving up on efficiency or on positive results. It only means: outsmart the differences, he said.
"That may require some trial and error phase and some apparent wasting of time, but there is nothing worse and more destructive than the schoolmaster approach that I have seen so often," he said.
For Schneider, the most difficult thing he has encountered while doing business in China is finding the right people for its fast expanding business.
"We have sometimes neglected the need to develop people and their skills before throwing them into a challenge. That is often very risky, for both sides."
It has now become easier to find the right people in the developing job market, he said, adding: "but ask me again after some time; maybe I will find my optimism premature."
(China Daily April 23, 2002)
