"Guanxi"  (relationship) is important everywhere in the world, but "Guanxi" has different meanings now.  Five years ago in China you could have been successful with a good "Guanxi",  no matter whether your products were suitable or not.  This has led some people to believe that that "Guanxi" is all you need. If you are establishing a business in China,  you will receive calls from people who tell you what good "Guanxi" they have, and how much they can help you sell your products.  After the initial excitement, though, you start to realize that very little is happening. The days when people could be successful because of their good "Guanxi" only, without considering strategic marketing and really understanding customer needs, are over.

"Guanxi" is still important, but it is not everything. You need a suitable product,competitive prices and strong marketing skills to be successful. Customers are becoming more sophisticated in terms of buying behavior – calling for public tenders is a good example. If you have suitable products and have developed your own marketing strategy, you may also establish your own “Guanxi”, although the language barrier remains a real problem.

Economic development,environment,culture,tradition,people lifestyles and language (dialects) are varying in different provinces, and this means that the markets are quite different among the provinces. The coastal cities and provinces such as Shanghai, Zhejiang, Jiangshu, Guangdong and Shandong are 10 to 15 times more advanced than the mainland areas. China actually consists of multiple market features, so your business strategy may be successful in one province but not in others.You need to consider different strategies when the situation is different.

Competition in China is also different from many other countries. Most of the international organizations that operate in china believe that they have to compete strongly with other international companies. Because this is the way they have conducted business in the US, Japan or Europe, they think they must continue to do so in China.

But this is not the case.You are not really competing with foreign suppliers in China-your real competitors are local Chinese suppliers.The largest market share is taken by the local companies, which grow up very fast and compete with you by coping your products or technology. Comparatively the market share of foreign companies is still very small, so the competitive strategy is really important in this market. Even your partner can become your competitor.And more seriously, it becomes essential to protect your technology in China by registering your patent technology at the start, to avoid future trouble. The legal environment is much improved now, and will really help protect you.

Based on the general picture you have of China economic development,environment, and culture, you should arrange for a market study of the industry you are dealing with. You have to identify your market niche, and set up your own entry strategy. You may also need to adjust your strategy when you do businesses indifferent provinces or when you find the regulations are different.I strongly convinced that market research becomes your first important job to do. Through market research, it will lower the risk to lose money and save you a lot of time. It will help you become successful in China challenging new market.