Small Business Is Different In China

When I went to China for a couple weeks earlier this month, I wasn't thinking about business. But even though it was primarly an educational and pleasure trip, I couldn't help be struck by some of the dramatic differences in how small and midsize businesses operate on the other side of the world.Fortunately, I wasn't on some everyday tour, but a custom-designed trip led by a Chinese expert, which included discussions with many Chinese locals and businesspeople.

I've written a column about my impressions and discussions over at bMighty.com, but I wanted to share with InformationWeek readers as well.

Don't Miss: bMighty.com -- What I Learned About Small Business In China

Obviously, there are an incredible variety of Chinese businesses these, but I did notice a couple of key trends.

First, the businesses I saw were all incredibly competitive, but that competition often takes very structured form -- primarily price. Many retailers appeared to be selling the exact same products, for example, in almost exactly the same way -- each one claiming to have a better price than the others. Only rarely did I come across businesses using innovation as a competitive weapon.

Chinese businesses also seem to be struggling with an issue of trust. We all know about the many recent Chinese business scandals, which could be one reason Chinese businesses and consumers seem to flock to well-known brand names -- perhaps hoping that this will guarantee them the quality they seek. At the same time, though, China is notorious for widespread counterfeiting of everything from DVDs to iPods to luxury goods. These fakes are everywhere, often cheek by jowl with retailers of the "real McCoys."

A fake iPod Just as important, though it wasn't obvious on the street, many of the Chinese people I spoke with seemed remarkably tolerant of a certain amount of corruption in business and official dealings. Finally, while small businesses in the U.S. often complain of too much government interference in the free market, the Chinese government is far more deeply involved in that country's economy. State-owned businesses often dominate markets, leaving smaller businesses to fight over the remaining scraps. So far, of course, all this has hardly been holding the country back. In the face of a vicious world-wide recession, China has already begun growing again. In many ways, the clash of opposites seems to define China today. To illustrate this situation in a nutshell, consider this image: While riding a bicycle outside the ancient city of Lijiang, I had to swerve to avoid a water buffalo standing by the side of the road... and almost collided with a shiny new luxury sedan. The water buffalo. For more on Chinese business, including parallels between the educational and business systems, comparisons with India, and further examples of the dichotomies in Chinese business, check out What I Learned About Small Business In China. Follow Fredric Paul on Twitter @ http://twitter.com/TheFreditor Follow bMighty.com on Twitter @ http://twitter.com/bMighty Put a bMighty gadget on your iGoogle page Get bMighty on your mobile device