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China Gateway? Not Hong Kong

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There was a time not long ago when the prevailing wisdom said going through Hong Kong was the best way to enter the Chinese market. Hong Kong, although geographically a part of China, is a modern, developed international city-state, a Special Administrative Region of China whose business people speak English, understand Western laws, processes and customs, and can act as an interpreter for any Western organization that wants to work in mainland China.

China Gateway? Not Hong Kong
Photo: Claudiozacc-Fotolia.com
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Paul Doherty
DOHERTY

In addition, currency transfer from China’s renminbi (formally called yuan) into Hong Kong dollars is easier than any other foreign-currency exchange. The obvious decision was to open an office in Hong Kong to serve as a beachhead to China.

This worked for a while, until the “foreigners” figured out a few things on their own about doing business in China.

Today, you do not need a Hong Kong gateway in order to conduct a successful business in mainland China. Although there are plenty of business arguments, circumstances and strategies as to why a Hong Kong beachhead may make sense for you, the times have changed: You can enter the China market directly with lower risk than in the past—and without the business middlemen of Hong Kong.

Western ideas, processes and ingenuity are highly valued in today’s China, which bodes well for architects, designers, engineers, innovative contractors, subcontractor and craftsmen, and high-end, luxury building products. It also bodes well for networked, solutions- focused real estate professionals such as facility managers and real estate advisers.

Yet China remains a difficult market for real estate brokers, general contractors, property managers and so-called deal-makers. The diverse culture, economics and dynamics of China create problems.

While your goal may be making money, you may be frustrated. The seething dynamics of power and the velocity of a maturing market make every deal here a wild card. There are no silver bullets. There are no cookie-cutter answers, even if you’ve spent years cultivating solid connections and relationships.

Role of Middlemen, Brokers

This caveat is not to say your solid, Western-based business models, ethics, morals and adherence to processes will not yield amazing results. But it’s execution and your ability to expect the unexpected at all times that will determine if you get a deal done in China—and whether you will establish that cherished business beachhead.

Which brings us back to the broker, middleman or partner you may choose from Hong Kong to assist with your gateway strategy.

Hong Kong businessmen are educated and intelligent. They can be aggressive in letting you know you need them in order to enter China.

Why use a middleman or broker? The value proposition is that they understand the culture since they are all...

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