The Wild, Wild East: Doing Business in China

Seattle Business Monthly talks with experts who have decades of experience in making the right connections in China. Find out what it takes for small businesses to enter this vast market.<br>

| September 2008 | FROM THE PRINT EDITION

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One trip to China in 2004 was all it took to sell Seattle technology entrepreneur Dave Parker on the idea of doing business there.
Even today, Parker is still ebullient as he describes how impressed he was with China’s booming but nascent consumer market. He says he likened today’s China to the “Wild West” era in the United States.

“After doing business in Japan for 13 years, we saw that China was going to develop into one of the largest consumer markets in the world,” says Parker, with a tinge of excitement. “It’s a very unique opportunity, probably the closest in our lifetime to the Gold Rush. Historically, we’re going to look back on this time and see how big it was.”

Parker knew he couldn’t pass up the opportunity to set up shop there—the only question was what kind of “shop” it would be. He ended up partnering with David Dong, who was lead software architect at the time for Classmates.com. The two decided to address professional networking needs between China and the West by creating 9Spaces, a Seattle-based human resources center that includes job, recruitment, staffing and market research services for firms interested in doing business in China.

Andy Mok, founder of Red Pagoda Concepts, where he consults on Chinese business, agrees with Parker and urges businesspeople to realize that now is the time to stake out their piece of China’s business territory.

“If you’re small or midsized, it’s later than you think,” Mok warns business owners. “If you don’t have a China strategy, you should have one now. [China] is both a dire threat and a transformational opportunity. If you understand that, you’ll thrive.”

Low-cost option, for now
Mok’s and Parker’s vision of China as the Wild West (or East) is apt in many ways, including the dynamics of the country’s vast workforce.

For the uninitiated, the idea of doing business in China may conjure images of cheap manufacturing and even cheaper labor. There is still plenty of truth to that cliché. Although Chinese salaries are climbing, they still remain only a fraction of the wages earned for similar positions in the United States. In 2007, the average Chinese worker earned an annual salary of 21,000 yuan ($2,756), up from 12,422 yuan ($1,630) in 2002, according to a survey from Chinanews.com.cn, as reported in Forbes.com. That same year, Washington workers earned an average annual salary of $44,721, more than 16 times