Editor's Memo Doing Business in China

November 29, 2003
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The virtual seminar "China 101: Fundamentals for Building Your Business in China Virtual Seminar Series," sponsored by TAPPI, took place October 22 and was very informative. Industry experts Hank McKenney of DSM Elastomers and Robert Wei Han of Dynea discussed methods of conducting trade in China. The presentation looked at two topics: factors a company interested in obtaining products from an existing business in China should consider, and considerations a foreign company should make when evaluating whether to establish local production in China.

Han's presentation was directed toward businesses that are interested in working with companies already established in China. He said that it is important to build a reputation for your company in China. This can be done by identifying customers with reference values and building partner relationships; by sponsoring association meetings or working with associations to run seminars together; by advertising or by doing governmental public relations, such as introduction through Chinese Embassies; and by organizing overseas visits for key officials and key customers. Han also discussed how Chinese companies operate and what resources are available to them, including manufacturing structure, wages and expertise.

A native of China, Han has experience in business development, sales and marketing, distribution networking, manufacture management, and overall strategy planning. He also serves as a part-time professor at Beijing University of Forestry.

Hank McKenney focused on the considerations that foreign companies should weigh when evaluating whether to establish production facilities in China and what factors may be different from making the same decision in the West.

Companies must decide whether to establish a joint venture or a wholly owned foreign enterprise (WOFE) in China. Joint ventures are beneficial for companies that are looking for a local customer base and local connections. WOFEs, however, are good for companies that have sufficient trade volumes, a capable sales and marketing team that can communicate globally, and contracted volume. Foreign companies doing business in China must be very good at recruiting.

McKenney has been employed by DSM for the past 37 years. For the first 20 years, he was involved in managing various production plants for DSM Chemicals North America. In 1988 he assumed responsibility as the managing director for the Nanjing China (PRC) Caprolactam project. From 1998 to 2001, McKenney continued his work on the project as an expatriate in the People's Republic of China.

The virtual seminar "China 101: Fundamentals for Building Your Business in China Virtual Seminar Series" was the second in a series sponsored by TAPPI's Decorative and Industrial Laminates Committee. For more information, visit www.tappi.org.

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