Starting a joint pig venture in China

The most important consideration for doing business in China is to first find a Chinese partner and second, learn the protocol.

Everything | Shutterstock | To do business in China, first and foremost you will need a Chinese business partner.
Everything | Shutterstock | To do business in China, first and foremost you will need a Chinese business partner.

If you want to start a business venture in China, be prepared to navigate a complex web of protocol and bureaucracy. But it’s not impossible. And as one of the world’s largest markets, China can certainly be alluring.

Three good areas for joint ventures

On the plus side, there are opportunities in the pork industry. Loren Puette of China Ag, a marketing intelligence and consulting firm on China’s agriculture and food industry, says there are three areas in particular where a Chinese partner might be open to a joint venture. Rendering is one. “There is a need within China to establish a modern and efficient rendering industry as evidenced by the dumping of diseased hogs upriver from Shanghai,” said Puette. Apparently the pits typically used for disposal were overloaded.

Technology for slaughtering and cold storage would also be a good focus for an investment firm. A third area Puette says worth considering would be supplying live breeder hogs to China.

According to Puette, “U.S. breeds produce more lean meat per pound than Chinese breeds and therefore cut down on feed costs versus meat produced. Chinese hog population is such that a modern pig-breeding farm could have room to grow before the rest of the industry catches up."

China has been notorious for being a difficult landscape for entrepreneurs. However, in the past ten years a lot has changed. The structure has gotten better and with a little help, starting a business venture in China is now easier than ever, most experts agree.

How to find a business partner

Choosing an area of focus is probably the easiest part of the business. To do business in China, first and foremost you will need a Chinese business partner, and there are no easily defined steps to make that happen.

Finding a Chinese partner is rather difficult and depends a bit on luck and networking,” says Puette. However, “finding the right one can help you navigate China's strict employment regulations, retail network, middle men and mercurial quarantine inspection guidelines.”

These days, China may actually be taking proactive steps toward finding foreign agribusiness companies to invest in. Puette cites the 2013 acquisition of Smithfield Foods by Shuanghui International Holdings Ltd. as a litmus test of sorts and indicated other similar projects may be in the works.

Making the necessary connections to find a Chinese business partner

AmCham China hosts networking events throughout the year. One of their main ones, The Agriculture and Food Partnership (AFP), was formed in 2013 as way to link U.S. and Chinese public, private and NGO organizations involved in agriculture and food supply to address the issues of food security and safety and sustainability through cooperation between the U.S. and China.

The importance of guanxi

Before attempting to make these connections, it would be worthwhile to spend some time learning Chinese etiquette and protocol. Cultural faux pas are not unusual between East and West, and something as simple as a misconstrued hand movement could end a potentially lucrative business deal. China is considered to have the oldest continual civilization with over 4,000 years of verifiable history. As a result, protocol and customs go much deeper and are taken more seriously than many Western business people may be used to.

At the very least, business people should have some concept of guanxi (pronounced gwan-shee). Guanxi is central to Chinese business networking. In the general sense, it means networking, but it’s much more complex and multi-faceted than our Western concept of networking. It has to do with depth of relationships, family, social and moral obligations and favors that are both given and received.

Guanxi happens slowly over time after trust has been built up. It requires patience and can sometimes be frustrating if you don’t understand the process. Business deals tend to evolve more slowly and are built on mutual trust and respect.

For Westerners who are able to embrace China and all its complexity, unexpected doors and surprising opportunities may very well open up there.

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