For every success story in business expansion to China comes a story of failure, according to a business advisory firm, and it’s not just cultural differences that see Aussie firms come unstuck.
Mark Chapman of advisory firm Bentleys said a knowledge gap not just in local culture and customs but also Chinese policies and taxation are contributing to failed expansion ventures.
“A number of Australian businesses – of all shapes and sizes – rightly gauge the lucrative opportunity the Chinese market presents with its rapidly growing middle class who covet Australian-produced goods, and Chinese businesses who view Australia as a preferred trading partner,” Mr Chapman said.
“Unfortunately, on the flipside of the opportunities there are some very real challenges for businesses who are not accustomed to China’s demographics, culture and complex bureaucracy, which can lead to less than desirable outcomes.”
One of the most confusing aspects of this bureaucracy, said Mr Chapman, is navigating local tax rates.
“Businesses are faced with the challenge of effectively managing the tax rate which requires proper tax advice; the reality of IP issues with stolen trademarks being the number one problem in China, as well as having to develop trusted contacts which can be difficult with no existing partnerships,” he said.
However, Mr Chapman said that rather than be put off from exploring market opportunities in China, Australian businesses must rely on robust advice and research to identify the ambiguous risks in advance, to enter the market fully informed of the differences with Australian processes.