More and more foreign companies are now seeking investment from China, and Chinese investment overseas has shot up over the past few years. While investment from your home country can now be hard to come by, China offers a huge source of private and public funds: Chinese investors are among the few who are actively searching for investment opportunities around the world.
According to the Hurun Report, there are over 2.7 million high net worth individuals in China. Many of these people have already made or will make investments in private companies overseas.
As well as being a source of finance, a Chinese investor can offer you increased access to the world’s fastest-growing market: their financial and strategic support can help you grow your business in China as well as at home.
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However, Chinese companies are unfamiliar with the investment environment in many countries, and foreign companies rarely know much about doing business in China. This, combined with the language barrier, makes it extremely difficult for investors and investees to find each other.
This article provides you with useful information and tactics on how to convert potential Chinese investors into your real partners.
1. Forget the Western rules and get to understand Chinese culture
Business culture or investment culture in China and everywhere else is unique. The first step to ask for Chinese funding is to understand the different working styles, motivation as well as expectation of Chinese investors.
The personal relationship is critical in China
It’s no longer true that Chinese business transactions are negotiated over the dining table, but this is still a very important part of the Chinese process.
Many Chinese Angle Investors mix business with life. Introducing your investors to good quality contacts, taking them to the sport or cultural events or even inviting them for a coffee or to a company dinner will all build tremendous goodwill.
Treat your investors as your respected friend but always be conscious of the business relationship and your boundaries.
Re-contact several times to maintain the relationship
You are advised to re-contact investors many times and provide them with useful information each time to maintain and nurture the relationship. It takes time for them to know you as a person as well as know your business.
Chinese investors work long hours
Chinese business professionals are known for frequently working long hours and even weekends, so you may need to prepare yourself for some late-night phone calls.
Fast communication is appreciated
Chinese professionals expect a quick turn-around when it comes to communication. It is common in the negotiation process for both parties to go back to their teams and come back with a revised plan within 2 or 3 weeks.
Wechat is better than email
Wechat allows for constant back-and-forth communication as opposed to emails, and are also very accessible outside of traditional working hours.
Therefore, Wechat is preferred in China even in the professional world. If the discussion is serious, your Chinese correspondents may expect a response within a day or two via Wechat.
Wear formally to show respect
Most Chinese investors prefer you to wear a suit and tie when you go to meet them for the first time, which shows your respect.
Watch your attitude
Do not be arrogant, do not be a sycophant since investors want to work with people who are on their level and will enhance their own networks and prospects.
Be very well-prepared and proactive
As a Western entrepreneur, you may be used to waiting for the investor to offer you a term sheet but when dealing with individual Chinese investors, you may need to take the initiative and propose an acceptable investment process.
You can also make their due diligence easier by having copies of your audited financial statements, company records, and relevant documents ready for them to inspect.
2. Online reputation is a norm in China
Chinese VC’s treat overseas investment cautiously and they will investigate your company at length before going into business with you.
They will go online, to Baidu search engine, Chinese social media or their network and check whether your reputation is healthy. Therefore, the online image can’t be under-evaluated.
This means a proper Chinese website, a strong Wechat account with a certain number of followers, positive mentions on related forums, visible on newspapers and magazines…
If you are invisible on the Internet, it means something suspicious. On the other hand, if you have a well-established presence in China digital world, it shows that your business has the potential to scale up in China as well as your serious commitment.
By making sure you have a positive online reputation, you prove to not only be a considered investment for any Chinese VC but can be particularly attractive to the Chinese market.
3. Diffuse positive rumors
Chinese angel investors value the endorsements and recommendations of trusted friends and intermediaries. This is due to the so-called “Problem of trust” in China society. It is a million times better to be introduced by someone than to go out and make a direct approach.
Therefore, you should pay close attention to marketing your business in China, diffusing your achievements through digital channels/ media and your network in China, making the information go wide and far.
Moreover, be careful with your personal reputation. Chinese angel investors place the utmost premium on trust and integrity. “Integrity is like virginity, there’s no getting it back once it’s gone.”
Also, remember that overseas Chinese communities are tightly knit and your good reputation is to be treasured above all else.
4. Chinese angel investors like to see a good business plan
Stop thinking that writing business plans is kind of wasting time.
Chinese investors really take into account well-prepared business plans. They want to see a good, detailed and well-presented business plan since it shows diligence, sincerity, and thoughtfulness.
Do your canvas, then write the business plan with a lot of details.
Utilize pictures, videos or any new technology to showcase your business, making it look sexy and attractive. Storytelling is what would make you different and able to impress Chinese investors.
ARE YOU READY TO FIND A CHINESE INVESTOR?
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HOW WE CAN HELP
INCREASED VISIBILITY ON BAIDU
It is necessary to develop a Chinese version of your site. It will have to be hosted in China or in a neighbor country. Make sure you have the right search keywords in order to drive traffic to your potential prospects.
EPRS ARE ESSENTIAL FOR HIGH VISIBILITY
Nowadays, digital is the way to go. Great content can easily become viral in China. Our team creates original & valuable content in mandarin. It will help not only to get a view but also to rank on Baidu.
SOCIAL MEDIA AS LAUNCHPAD
WeChat is the first step in converting your prospects. As a flagship application in the Middle kingdom, you need to be familiar with its use in a professional setting to help you promote your offers.
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