2016年CRI Can foreign companies operate successfully in China?

At a recent funding conference in Beijing, celebrated 1 Singapore based investor 2 Jim Rogers spoke 3 about the wealth of opportunities in China for companies and investors 4 alike.

"I am investing in pollution control.. Look out of the window. You will see that China's filthy 5. But Beijing is doing a lot about this and spending a lot of money to clean it up. One Belt One Road is spending a lot of money on railroads. There are many ways you can invest in China, agriculture and healthcare. So at the moment, for the most part, I'm investing in parts of China, the Chinese economy, where Beijing is spending their money. They have more money than I do. They are smarter than I am."

Success in China means gaining access to a market of 1.3 billion people, a prize almost irresistible 7 to businesses from across the world. But as the taxi hailing company Uber found out, simply having a market dominance elsewhere, or a good business idea, isn't always enough to create success in China.

Foreign companies cite several reasons for frustration 8 or failure… among them finding workers with the right skills, perceived preferential treatment for local companies, and raising awareness 9 among the public. So many opt 10 to work with businesses already operating in China. But Cao Can from Shengya Capital, warns even having a local partner is no guarantee of success.

"Didi has the backing of local tech giants such as Tencent and Alibaba. But they also have the support of local governments, and the local press. So it's very hard for Uber to compete without some support. Many of these foreign tech giants are sometimes a bit naive 11 when they first enter China. They thought it was going to be a cake walk, because they are dominating other markets."

Tom Simpson, from the China Britain Business Council works with companies hoping to become successful in China. He says it all comes down to research.

"Every market is different. It's not just China that has its complexities 12. If you look at the markets, markets like Korea, Japan, there are complexities that come with entering those markets also and so companies in general see it very much as par 6 for the course. You've got to go through that process of research and understanding local regulations and understanding local culture, customs, the role of government – role of the state owned sector 13. In general, companies are willing to play ball."

So is there a recipe for success? How should foreign companies approach access to the Chinese market? Cao Can from Shengya Capital again

"I think Uber has already done an incredibly good job in the sense that Uber China is a localised team, with localised executives, and local decision making capacity but still when it comes to for instance PR Relationships with local government and the press it probably lags behind Didi and that's how it was able to do the catch up and eventually cross past Uber."

Things are changing. Continued reform and opening up is creating a more foreign-friendly terrain 14 for overseas companies. But it's clear, unless they fully 15 understand China and its people, many firms will fail.

For CRI, this is Bob Jones.