Case Study NIHAO GLOBAL

Transcription

1 Case Study NIHAO GLOBAL Image: 2015, jo.sau, flickr Many entrepreneurs have rushed into China since it opened its doors in 1978, tempted by opportunities to get rich quick in this fastgrowing market. While professional services firm Nihao Global might look like an overnight success story making a six-figure profit in its first 12 months of operation it actually took years of research and in-market knowledge to get to that stage.

2 Key learnings Strategically review the market and identify a gap: If you re considering China, research and learn about the market and think ahead to identify emerging opportunities. Nigel Blair spent four years attending trade missions and learning about business in China before he established Nihao Global. Engage vital Chinese market insights: It is crucial to consult those with local knowledge that understand the market well. If entering into a Chinese partnership, ensure your partner is the right fit for the growth of your business. Effectively navigate China s business regulation environment: The constantly changing nature of Chinese laws and regulations is an ongoing challenge. Nihao Global found the best way into China was through Hong Kong s more business-friendly environment. Don t cut corners reinforce quality: It is easy in China to cut corners to maintain growth but don t risk damaging your reputation. Have detailed quality assurance practices in place. Constantly reinvent yourself: In one of the world s fastest growing markets, it is vital to keep up to date with the continuously evolving environment. Know what your competitors are doing and what clients want.

3 Case study 3 Nigel Blair, President of Nihao Global, knew China offered great opportunities, but it took four years of research and planning before he felt ready to launch the business in Although he had extensive experience in establishing and conducting business in Asia, he recognised that China was unique. So many foreign companies entering China assume it is just like their home market or other regional markets. But it isn t. They tend to fail due to a lack of a real understanding and knowledge of undertaking business in China, which leads to incorrect or ill-informed decisions, he said. Before setting up in China, Nigel took every chance to learn about the local market, culture and business environment. He went on several Australian and state government trade missions to China, proactively engaged with local and Australian businesses there, including the various Australian Chamber of Commerce (AustCham) organisations, and spent time networking and building connections. Through his research, Nigel discovered a number of opportunities associated with China s growth. I started thinking What does an Australian or a foreign business person need when they are in China? What are the challenges that they experience? Strategically review the market and identify a gap: do your research, understand the Chinese context and find emerging opportunities The key was identifying a gap and positioning ourselves strategically to address it, Nigel said. Nihao Global is now represented in 19 major Chinese cities, with more than 300 bilingual contractors with a range of specialities and experience providing tailored services to a variety of industry sectors. Clients have grown to include the Australian federal and state governments, and a mixture of Western businesses, business councils and Chambers of Commerce from countries including New Zealand, Canada, Israel, the UK and the US. With more Australians and other foreigners expanding their businesses into the country, there was a rising demand for high-quality interpretation and translation services. There was also a need for other professional assistance, such as market research on local Chinese companies for partnerships, and personal assistants for those visiting China on business trips. The concept of Nihao Global was born. Image: 2015, cdschock, flickr

4 4 Case study Engage vital Chinese market insights: consult those who have extensive knowledge about the local context and consider a local partner Having developed the idea for Nihao Global, Nigel set about finding and engaging a Chinese partner who would bring vital local experience and presence to the firm. You can t just set up in China with your own Australian employees. You need local contacts on the ground and therefore local managers in China, he said. The choice of a Chinese business partner is critical but Australian businesses should not dismiss unconventional routes in finding the right partner. I knew what kind of person I was after one that was young, passionate, got on well with Australian business people and was able to handle numerous tasks under pressure, Nigel outlines. He found that person in Janey Lee, now Nihao Global s Chinese partner and Executive Director, who was the guide and interpreter on a Victorian Government Trade Mission in China. I observed Janey for a week interacting with a variety of Australian businesspeople where every scenario that could possibly happen did lost passports, missed flights, business deals. I got to see her work ethic and passion for her job I knew she would be perfect to get Nihao Global off the ground. Once the partnership was established, Nigel designed strategies to develop Janey s skills and ensure the success of Nihao Global. This included bringing her to Australia for a few months to understand commercial operations through practical, on the job training at his other companies, and attending an intensive language course. Investing in developing your Chinese partner is critical to not only develop their knowledge of business in Australia but also expand their management expertise, he outlines. Another key to the success of the partnership was aligning the business with Janey giving her not only responsibility for the Chinese operations in finding translators and interpreters, but also linking her to the business through financial investment. I made the expectations on her very clear from the beginning I would fund the initial investment and in return, once we broke even, she would double her salary and be a shareholder. This made Nihao Global Janey s company too therefore its success or failure would be based on the amount of effort she was willing to put into it, Nigel said. The next challenge for Nihao Global was finding contractors in China to provide the services and developing a client base. Using the strengths of each side of the partnership, Nigel was in Australia handling the practicalities associated with setting up a legal entity while Janey was attending AustCham events and business forums, trying to find potential clients. She was also busy travelling across China recruiting graduates of language degrees through local connections. This point of building a new business can be very discouraging for your Chinese partner as it is not only a learning process but often they can feel disconnected and demotivated in not seeing instant success with signed contracts, highlights Nigel. Australian businesses establishing a partnership in China should note that constant support, trust and communication are crucial, especially when the partners are in separate countries. Nigel added: Building trust isn t an instant process and is essential in doing business in China, but a lot of time and communication is required.

5 Case study 5 Image: 2015, Esparta Palma, flickr Effectively navigate China s business regulation environment: be aware of continuously changing Chinese laws and regulations Chinese laws and regulations, including those associated with foreign ownership and investment, tax, employment and repatriation of funds, are very different to those in Australia. They also are constantly changing, as the Chinese government moves to make foreign investment an easier process a factor new Australian businesses sometimes struggle to keep up to date with. Nigel was fortunate in that he had previously worked in China, but he recommends that those with little or no experience of the region seek help to ensure they make the right decisions from the beginning. In addition to seeking professional advice, talk to other Australian businesses and ask how they initially set up their business in China. Information on what others did and experienced can be very useful, especially when you don t know where to start, he said. As Nihao Global was a start-up business, Nigel opted for a partnership model. The company s headquarters were set up in Hong Kong with the Chinese entity engaged for provision of services. This model often used by foreign businesses wanting to enter China gave Nigel the security of establishing a company under English law as well as the advantages of tax benefits and easier repatriation of profits. Don t underestimate the restrictions and time involved in setting up a business in China, he warned with numerous trips required from Australia to Hong Kong and China during this initial phase. Although it is a costly and lengthy process, it is manageable and necessary. Setting up businesses in China should become easier for Australians following the signing of the China and Australian Free Trade Agreement (ChAFTA), as the Australian and Chinese governments are working closely to make processes more efficient. One other important regulatory challenge that Australian businesses need to be aware of is the Great Firewall of China the strict internet censorship system monitored and enforced by the Chinese government. This can cause issues with transferring data across global offices and data security. Ensure the system you use and data storage software is appropriate as some will not be due to the regular barring of sites such as Google and its services Gmail and Gdrive, Nigel said. This can also impact your business s website and the content that your clients can access. Change your way of thinking China is different. ChAFTA - benefits for Australian services firms China is already Australia s largest offshore market for services. In 2014, Australia s services exports to China were valued at $7.5 billion. Following the signing of the China and Australian Free Trade Agreement (ChAFTA), opportunities for Australian service providers are set to grow. Specific areas of opportunity in China include: Improved market access for Australian banks, insurers, securities and futures companies, law firms, education services exporters, healthcare providers, aged-care providers, construction firms and telecommunications businesses. Increased business and skilled worker mobility. The Chinese Government is reducing barriers to Australians working in China. Wholly Australian-owned companies will now be allowed to establish in China. This will benefit firms in areas such as telecommunications, tourism and hotels, health and aged care, manufacturing, maritime transport, real estate, and research and development. Australian architectural and urban planning firms will be allowed to obtain more expansive business licences to undertake higher-value projects in China.

6 6 Case study Why do some Australian businesses fail in China? Going it alone: Businesses without an understanding and knowledge of the Chinese business environment, culture and regulatory climate are setting themselves up to fail. Limited preparation and research prior to entering China: Don t assume that business in China is just like at home it s not. Do your research on the market, industry and primary competitors. Dealing with the wrong people: It s vital to connect and build relationships with key decision-makers. Negotiating with people in senior hierarchical positions is essential in Chinese business deals. Neglecting to seek professional, experienced help in China: It s not enough to have a basic understanding of the Chinese regulatory environment. To launch successfully in China, businesses should consider engaging professional services firms to help with legal advice on regulations and strategic issues such as marketing. Don t cut corners reinforce quality: maintain your business s reputation by ensuring the quality of the service or product you provide It is not unusual for companies in China to cut corners to save money and time due to the constantly evolving environment. To do this is also culturally acceptable. But be warned: taking this approach can damage your business. A business s reputation is key for success ruin your reputation and you will lose your client base. Therefore it is imperative in China to reinforce quality, no matter what industry you re in, emphasises Nigel. For Nihao Global, maintaining quality is particularly important as interpreters not only have to correctly translate meanings between languages, but also communicate the nuances of the words. Ensuring standards remain high is an ongoing process that starts with recruitment. Don t always believe a résumé in China, Nigel explains. In many cases, work history and experience is made up or copied from someone else s résumé so ensure you do thorough referee checks, but also question the candidate on their experience and past projects. All potential contractors are put through extensive testing and real-life scenarios to not only establish their skills, but also see how they act under pressure and in different cultural contexts. These exercises are carried out in Mandarin and English, ensuring consistency and quality. Once engaged, all contractors are required to sign and abide by a strict code of conduct and begin on smaller projects. They have their work reviewed regularly and are tested throughout their contract, which enables them to be placed in a constantly-updated ranking system based on their level of skills, expertise and work history. They can then be assigned jobs based on this ranking. Feedback is also continually sought from clients through customer satisfaction surveys. This ensures Nihao Global is constantly aware of the level of service received by clients. Maintaining quality of services is further upheld with translated documents always checked and reviewed before being returned to the client. Poor relationships with Chinese business partners: Time and money must be invested to help you understand your business partner s expectations and ways of doing business. Communication and setting clear expectations are crucial.

7 Case study 7 Constantly reinvent yourself: maintain a competitive advantage by listening to your clients changing needs Ongoing strategic planning has been crucial in keeping Nihao Global ahead in the highly competitive Chinese environment. As well as seeking feedback from their own clients, the company continually monitors their competitors, studying the quality of their service, rates and client base. They constantly look for new ways of removing the barriers their clients face by seeking regular feedback and suggestions. When clients expressed concern about transferring money overseas, Nihao Global set up an entity in Australia and the UK that could take secure online payments in local and US currency. Innovation and staying ahead of competitor offerings is also crucial in the Chinese market. Nihao Global is considering ways to make their business simpler to access and available to a larger client base in the future. They are currently making it easier to assign an appropriate contractor to a job request from clients by developing an online database of more than 1,000 interpreters/translators. The system will be able to automatically generate almost instantly a list of candidates with their experience, history and ranking for clients to review and choose from, based on their needs. It not only helps clients, but also reduces the level of management needed for assigning contractors and translators. Conclusion Setting up a business from scratch is not an easy task in any country and Australians wanting to take advantage of China s impressive growth should not underestimate the challenges of the local environment. A business can grow in China just as fast as it can fail, and as Nigel s experience in establishing Nihao Global demonstrates, success is possible but it takes much more than just persistence and commitment. As China further engages with Australia through ChAFTA, Australian businesses should consider their strengths and how these can address the growing needs and opportunities in the Chinese market. Nihao Global is additionally proactive in seeking out new opportunities and promoting their services in Australia and China. The company is a member of every Austcham in China and is now a sponsor of AustCham Beijing, providing a bilingual interpreter at all events while also providing interpretation services at various Australian trade shows in China. These efforts are paying off. Nihao Global is expecting three to five fold growth in Nevertheless, they intend to continue their yearly process of reviewing the business to identify any required improvements to ensure this success and growth continues.

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