Tal Gal On: Pitching – The Chinese Way
Pitching – The Chinese Way
“I can’t understand them. It was a perfect meeting. They kept nodding their heads and I kept telling myself that I am just one signature away from getting an investment from this huge Chinese company. What was I missing?”
This is but one story, yet it represents many of the conversations I have with Western companies who pitch to Chinese investors.
Surprise and disappointment dominate the scene a few months after the meeting with prospective Chinese investors, failing to get the desired investment, and missing the cues on the way.
China is the new land of opportunities for many companies on the lookout for PE or VC funding. China’s outward investment topped $161 billion in 2016. The Chinese government encourages investments that meet the nation’s investment criteria, including programs such as BRI (Belt & Road Initiative), “Go out” policy and the Chinese 5YP (five year plans).
China will become one of the world’s biggest overseas investor by 2020.
So, if all factors are in favor of getting Chinese investments, why is it so difficult?
Here are a few key repeating issues:
Western company’s offer is not aligned with Chinese requirements/agendas
Business culture: be it unrealistic expectations, missing of verbal or non-verbal cues or failing to properly follow-up, all can lead your company to miss the spot
Misinterpreting the Chinese side’s intentions
What can we do to increase the potential for signing a deal?
From my experience, the following will immensely benefit your engagement with the Chinese:
1. Before you go – Be ready, the Chinese will surely be!
Many Chinese firms invest in line with national policy. Make sure that you are familiar with the Chinese 5YP: Encouraged industries and technologies and other initiatives included. These will help you focus your offering to China’s needs, and lure in potential investors. The Chinese usually know what they’re looking for and will investigate your company before-hand. Nevertheless, you want to make sure that if your product stands in line with Chinese investment scheme, this alignment is visible in your presentation. This can be the key in approving the investment in your company with the Chinese MOFCOM (Ministry of Commerce) and other related regulatory agencies.
2. Lost in translation – while more than 10 million mainland Chinese use English for communication, this is still less than 1% of the population. There is a good chance your Chinese counterpart doesn’t master English at a conversational level, especially if they are over 40.
When you are trying to get a big investment from China, invest in translation.
Make sure your materials (PPT, demo, marketing materials etc.) are in Chinese.
Customization is a Key – From slides to statistics; make sure you use China specific figures. Share success stories from your work in China if you already have such (rather than Europe or US). Use statistics from China that make sense to your audience. Most Chinese investors only care about their (huge) local market.
Do your homework: investigate your potential investors- where have they invested before? Are they experienced in investing abroad? Do they have the funds available for investing outside of china/offshore (dollar fund) or only locally (RMB funds), and only for a local company (JV, WFOE).
3. During the meeting – detect the decision maker (hint: s/he isn’t always at the table). If s/he is at the table (sits in the middle, gets lots of attention from subordinates), make sure you give her/him proper attention and respect.
Work properly with a translator- 2-3 sentences each time, prepare them beforehand with relevant materials and keywords, and make sure they get the key messages.
4. The meeting between the meetings – where it all happen: A lot was written about relationships in China, and mostly rightfully so. Creating strong relationships is the key to successful business in China, and not the other way around. Meals, karaoke, spa and all the rest are part of the business in China. Do your utmost to tag along when invited for a meal.
5. After the meeting – Patience & persistence – some decisions take time in China, especially when it comes to SOE’s (State Owned Enterprises). That said, you should always be informed, maintain daily contact with key personnel with the potential investor, and make sure to follow-up promptly when needed.
About Tal Gal-On
With over 13 years of experience of interacting with the Chinese culture, market and most important – people, Tal offers an individually tailored solution to all your business communication needs in China. Tal consults to leading Israeli companies on how to approach, develop and sustain a strong business relationship with Chinese clients.
Tal lived, worked and studied in China. He speaks, reads and writes fluent Mandarin Chinese