China consultants guide small business

Marketplace Staff Mar 25, 2008


Doug Krizner: Many retailers dream of just getting a sliver of the Chinese market. Who can blame them — 1.3 billion people is a lot of potential customers. But when a smaller-sized business jumps in to China without knowing the ropes, a lot of time can be spent fumbling in the dark.

Not to fear: these entrepreneurs now have a place to turn for advice. Bill Marcus picks up the story from a Hooters restaurant in Shanghai.

Hooters Waitresses Welcome to Shanghai Hooters!

Bill Marcus: When the first Hooters restaurant opened in China, the franchisees had what you might call a cultural problem. Photos in recruitment post cards sent to them by Hooters’ main office in Atlanta scared off prospective waitresses.

Mike Golden: Their chest sizes were fairly enormous, so we had to use Photoshop and reduce their chest sizes on the postcard.

That’s Mike Golden. His four year-old Shanghai consultancy, AdSmith, tackles delicate issues like this. AdSmith is one of a growing army of consultants catering to small foreign businesses in China. Or, as he puts it:

Golden: People looking at the Chinese market and completely missing the point and missing their target customers.

His services start at $3,000 a month. Big consultancies like Price Waterhouse Coopers can charge $10,000 for a retainer.

AdSmith’s target market is the small entrepreneur. Consultants like Golden handle sourcing, marketing, IT, cross-border employment, and even give tax advice. And if they can’t do it, they’ll find someone who can.

Magic Cheng’s sets up two dozen foreign businesses a month. He’s helped purveyors of cosmetics, lighters, and phones.

Magic Cheng: We’re just doing the things under the laws, and we will find some ways to get it.

More than two dozen U.S. states and municipalities also help small businesses negotiate entry into China’s markets. With its suite of offices in central Shanghai, the state of Maryland has the biggest operation. It funds up to 40 hours free advice for about 70 entrepreneurs a year. More help costs $30 an hour.

In 2006, the Maryland Center generated $308 million in business. Consultant Ning Shao runs the center.

Ning Shao: We will find a distributor for them, we’ll manage their distributorship for them, and we are their China office.

But beware, warns author, historian and market researcher Paul French:

Paul French: China being China, of course, and the gold rush mentality here, we have vast numbers of people who call themselves consultants. And what they know about China, of course, is anyone’s guess.

French warns most consultants won’t tell businesses this fundamental truth: vast numbers of Chinese still don’t make enough money to buy their products.

In Shanghai, I’m Bill Marcus for Marketplace.

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