Chinese Business Opportunities

Just like any business venture, doing a thorough due diligence is absolutely critical to success. It is no different with doing business in China. Many a business hear of the great riches that await in China and launch without much of a business plan or researching the local culture, business environment, or available resources. Alysha Khan and Doreen Hemlock state that:

To succeed in business with China involves doing your homework, building trust with Chinese partners — and often drinking lots of alcohol.

That was some of the advice offered by a panel of China experts at a seminar Thursday in Fort Lauderdale, sponsored by HSBC Bank and organized by the South Florida Business Journal.

Panelists said too many U.S. companies fail in China because they don’t do their research and refuse to get on a plane to learn first-hand how the Chinese market works. They also don’t spend the time needed to build relationships with Chinese partners — which often means dinners with many drinks.

“The Chinese are not going to buy from you just because you have a fantastic product,” said Lawrence A. Freeman, chairman of Global Investment Business Advisors of Miami and a three-decade veteran in China business. “They’re not going to buy from you unless they know you and trust you.”

South Florida companies now do all kinds of business with the Asian giant, from contracting at Chinese factories to selling scrap metals and even arranging for Chinese investors to move to the United States.

One sign of these growing ties is trade.

South Florida’s direct trade with China rose almost 9 percent last year, to $6.2 billion. Most of this trade involved imports of computers and high-tech goods — including some goods that were later sold to Latin America, according to U.S. trade data analyzed by WorldCity of Coral Gables.

Florida-China trade is forecast to rise farther still, after the expansion of the Panama Canal in 2015 brings larger ships from Asia to U.S. East Coast seaports, said Ken Roberts, president of WorldCity.

Local companies can cash in on the growing transport links by boosting their exports to China. Beijing’s latest five-year economic plan puts less emphasis on China’s exports and savings and more focus on Chinese consumer spending — a push that encourages imports, said Stephen Zhao, who runs the China desk for commercial banking at HSBC Bank USA in New York.

Born in China, Zhao offered a glimpse into the speed of change in the nation of 1.3 billion people, which began opening its tightly controlled market to the world in 1978.

Zhao recalled that more than 30 years ago, a typical birthday present was a boiled egg that a child would share with his siblings. Now, it’s more likely to be a birthday party in a restaurant with friends and, of course, a birthday cake.

“Imagine 1.3 billion birthday cakes,” Zhao said, underscoring opportunities for Florida sales in the country that now has the world’s second-largest economy.

Chinese tourism also holds promise for South Florida as China’s fast-growing middle class travels more overseas, said Anly Liu, chief executive of Oriental Logistics Miami and president of the Florida-China Chamber of Commerce.

A Chinese group is now financing a more than $3 billion resort on Nassau in the Bahamas, and more than 5,000 Chinese workers are helping build the mega-project. If the resort can’t be filled with U.S. vacationers, developers likely will bring in Chinese travelers, said Barry Brant, a partner in the South Florida accounting firm Berkowitz Pollack Brant.

“I think Miami can be a very good location for them to invest” once the Chinese are used to the Bahamas, Brant said. Some Chinese already are looking to invest in Florida hotels and offices, he said.

One local company trying to sell to China’s business class is Crefdi Realty Advisors of Delray Beach. It’s touting commercial real estate deals in South Florida and across the United States. No deal has closed yet, but several are in negotiations, company analyst Tingjun Chen said.

Chen was born in China and raised in the United States.

“We’re doing a lot of relationship-building now,” Chen said. “The Chinese have to know you and trust you, and being Chinese and speaking the language gives me an advantage.”

There are many great opportunities doing business with China, but to believe that it is an easy task would be to prepare to fail. Yes the opportunities are there, but just like any business venture, make sure you create a business plan, and do your research. After all, fortune favors the prepared mind.