How should small- to medium-sized companies approach China?
SG: Thats a big question. The simple answer is very, very carefully. We use the term six Ds when talking about approaching China (i.e. due diligence, due diligence, due diligence). For SMEs as compared to larger multi-nationals, the risk is typically higher, their resources are less and their international experience isnt as deep or sophisticated. Any move to China can have a profound impact on their business. MM commentary: While there are great opportunities in approaching China, the pitfalls are just as deep. MM: How can you fully qualify and do due diligence on partners in China? SG: First, you have to commit to spend the time and money to do it right. Many SMEs take a do-it-yourself approach or conduct any investigation on the cheap. It takes travel (which is expensive) and time in China. This means time out of the office running your core business. The CEO and/or owner must often be involved along with other key managers. Because these resources are precious, small companies will
