First Impressions of China
I joined Lithium Energy Products – formerly Northern Iron Corp – in November 2016, and within the week I was in China liaising with our clients, potential customers and our investors based there. I had never been to China and had no preconceived ideas of it - aside from a polluted Beijing – and found myself amazed by China’s scale, industry and rate of expansion. Almost every manufacturer we met had ambitions to double, triple and quadruple their production within the next few years, and despite having worked in other industries and countries I’ve never encountered such business plans, impressing upon me how much business potential there was in China.
Before the trip I’d heard talk of a slowdown in China but I saw only evidence to the contrary. Large scale construction projects decorated the cities and every business we encountered had vast expansion plans. Chinese wealth has increased to such an extent that China is now setting up factories in other Asian countries where labour is cheaper; that’s pretty remarkable for a country of almost 1.4 billion people that was fully communist less than 40 years ago.
I fortunately joined a company that has a longstanding association with many businesses, individuals and investors in China. A lot of business arrangements in China require close personal relationships between the executives, and establishing those bonds can take years. While in China I was also told that contracts aren’t much trusted, and are difficult to enforce because of the subtlety of the Chinese language. Consequently, they are often ignored and businesses place a lot less faith in them compared with Western businesses. For this reason Chinese companies are often investing in both you and your product when they sign an agreement or business arrangement.
LEP is fortunate that two of our Directors are Chinese and China based, and who both have extensive connections in the industries we are working within. One of our Directors manufacturers battery precursor for many of the manufacturers we met, so we were treated very familiarly. If part of my job had been initiating these Chinese relationships then I can imagine years of frustration and meeting low level employees without influence before encountering influential people with the ability to broker deals. However, I walked straight into established business relationships and met with Directors, Chairmen, Managing Directors and CEOs – which was certainly a preferable start. I found these businesses were incredibly hospitable and friendly if we were vouched for by someone they trust. We were treated to a series of banquets by different companies that left me dreading the next one. It was certainly treatment I was unaccustomed to but was not unopposed to either.
Chinese businesses are very hierarchical, and subordinates exist predominantly to ensure their superiors’ ambitions are achieved rather than working towards the company’s success. But this also makes it very easy to do business in China if you can meet the right people. After some very promising discussions with senior personnel we knew deals were certain as senior personnel do not have to consult with anyone. They made the decision and it wasn’t questioned, and consultation wasn’t sought, it was just enacted.
During our trip we brokered two MOUs with Chinese companies for our products and expect more. We have another business trip arranged for March to meet new potential investors and customers and expect more business to follow. I felt a real push by Chinese companies to invest their money outside of China - possibly because they fear the government could potentially involve itself in their China based operations – which is great news for any business offering to facilitate this; such as us.
Click here to see few photos of my trip.