While international associations have grown, expanded, and contributed on the industry development in China, they are still facing different challenges, which are the factors international associations consider how to adapt to the Chinese market and avoid risks strategically.
Regulatory Challenge
In the past years, due to the important role of International associations in the exchange and development of the industry, Chinese government has been overall supportive to the development of international associations in China. However, there were not clear laws and regulations on international NGOs, and for some activities conducted by the international associations, Chinese authorities will be showing their concerns due to a lack of monitoring or clear intention, in this case, the attitude from Chinese authorities to the international associations in China is ambivalent. On January 1, 2017, the Law of the People’s Republic of China on Administration of Activities of Overseas Nongovernmental Organizations in the Mainland of China (FNGO Law) came into force. This Law stipulates how international organizations should conduct activities in China, and covers any Non-Mainland Non-Governmental Organizations, as well as nonprofit organizations that will need to comply with the stipulations in order to operate in China. The legislation is written in a vague way and there is an additional cost of compliance, which makes conduct activities in China more procedures for many associations. Defined as “not-for-profit, non-governmental social organization,” the bills sweeping definition does not properly differentiate the association sector. All foreign NGOs would be forced to have a government-affiliated sponsor. The sponsor must be approved by an Industry Supervisory Unit. This regulation effected significantly limiting the ability of associations to hold conferences and conduct events.
Difference in Culture Understanding
China is a country with a long history, and the culture inherited from the long history has far-reaching influence, and even affects today’s society. When international associations do business in China, cultural differences will be an important factor to consider, as that will sometimes definitely have a big impact on business behavior and business connections. This cultural difference is reflected in every aspect, including courtesy of meeting, giving gift, accepting invitations, attending meetings, etc. In China, people will express their thoughts and opinions in an implicit way, taking into account the occasion and “face”, compared to the foreigners who will be quite straight. “Face” is a very important thing for Chinese, and it represents a person’s reputation, and is important to the relationship between superiors and subordinates, especially when dealing with government departments. Another important thing for international associations is that in China, many people are more willing to do business with people they have a connection with, which is call “Guanxi”. With good “Guanxi”, business and negotiation will be easier to be agreed. In this case, establishing a good “Guanxi” with government agencies, local counterparts, partners, and some important people is a key action for the international association, which will make things go more smoothly.
Language
Language, is always an obstacle between Chinese and foreign relations that can’t hide from the past. That is why, on most occasions, many business people bring accompanying interpreters, who can help correctly convey the meaning of both sides to each other. Although some people could speak a foreign language very fluently, sometimes there are still differences in understanding, so a native speaker’s coordination or assistance is crucial.
Competitive Relationship with Local Counterpart
Establishing good relationships with local counterparts is important and helpful for the business operation, and most local counterpart welcome the international relationship. However, some local counterpart’s business is similar to the business of international associations, such as the local associations from the same industry, and certified program, which means there will be some competition between these associations, which will stop further cooperation, and at the national level, the government will give a more priority on protecting local industries.
Knowledge IP Protection
Although the Intellectual Property Law has come into force for decades in China, people’s awareness in this area has been strengthened in recent years, but in general, people’s awareness of knowledge protection is still relatively weak. Many people will unconsciously take other people’s knowledge to use, however, in fact, this has caused infringement. International associations need to be aware of the knowledge IP protection.
Constant Changes
When international associations adapt to the Chinese market, they should also keep an eye on the change of national policies and local markets, and then adjust their development strategies in China to adapt to the changes accordingly.
Local Management
For the international associations that do not have a physical office in China, when they plan on some activities, there will be a lack of local management experience and resources, and timely communication with local counterparts, partners, and vendors to exchange information and ideas and meet the deadline.
Conclusion
From culture to business environment, business plan to actual execution, international associations face many different challenges when operating in China. Overcoming challenges and turning them into driving forces of development is critical to strategically adapt to the local market and further enhance the ability of risk management. Kellen, as the world leading Association Management Company, provides one-stop services with a physical office, local bilingual staff, and a professional team, which makes international associations operate their business in China more smoothly.
