Issue link: https://iconnect007.uberflip.com/i/1060280
44 PCB007 MAGAZINE I DECEMBER 2018 ers. The notice openly stated that "…going for- ward, it will be more difficult for you to re- ceive a work permit." However, a different agency still includes the following on the Chi- nese equivalent of a W2 form in English stat- ing that the bureau"…thanks you for your con- tribution to building China's economy." Com- plex indeed. Along with keeping a low profile, your Peo- ple's Republic of China (PRC) entity and oper- ations will need to be "squeaky clean" and in full accordance with "all relevant rules, laws, regulations, and customs of the PRC." While this has always been the case, this lever is in- creasingly being used against foreign players, like Apple (excessive profits tax) and Google (content management and censorship). Payment terms by Chinese companies have always been slow. Few adhere to a net-30 pol- icy even when they have signed a contract to do so. Situations are considered fluid, and pay- ment streams are affected. Plan for this even- tuality. It's not that Chinese customers won't pay, it's just that cash flow might be affected. This is especially true when payments are in U.S. dollars because there has been an 11% de- cline in the RMB(CNY)/USD value in the sec- ond half of 2018 alone. This means Chinese companies need to spend 11% more to buy the same thing in dollars. Volatility touches every- thing. In this turbulence, it is important to position yourself as a global player wherever applica- ble. When your company can emphasize op- erations in the EU, factories in China (and the rest of Asia), R&D teams in Germany, etc., you can better avoid pulled into a bilateral dispute in your external-facing Chinese language state- ments. Position your business as global. New projects and undertakings will be easi- er outside the central business districts (CBDs) of big cities like Beijing, Shanghai, and Guang- zhou/Shenzhen. Foreign businesses need an approved China business license to operate. While these licenses often define a narrow scope of permissible activities, services, and businesses, what isn't widely known is that business licenses are locally approved but na- tionally applicable. Also, differences between locations can work to your company's advan- tage. Even in today's complex and turbulent mar- ketplace, second- and third-tier cities can of- fer and are offering incentives for new for- eign investments in nearly all categories. Tax rebates, no-cost office spaces, or business li- cense scopes similar to your company's busi- ness model can all be negotiated in places like Chengdu, Zhengzhou, and Qingdao. These lo- cations offer new airports with direct interna- tional flights and are connected to the 10,000- km domestic high-speed rail network. By pop- ulation, these "smaller" cities are still larger than New York City and Chicago combined! A crucial final strategy is to maintain cor- dial, strong relationships with the local gov- ernment where you operate. Regular meetings with officials are a great use of your time and will bring long-term benefits, such as gaining an early notice of new infrastructure projects. Showing officials what you and your company are doing regarding corporate social responsi- bility may help them fulfill requirements from central government. Similar to the Hawthorne effect where subjects alter their behavior in a study due to an awareness that they're be- ing observed, such contacts will provide a face and recognition to key players and factors in your business's success. Conclusion Even a turbulent China still offers great op- portunities if you understand how to operate. China is the second largest economy world- wide and is now at the table on a global basis. The Chinese approach to business is unique; China will still be volatile and very competi- tive for the next few years. Being a bit low key, focusing on local-level relationships, and dis- playing cultural sensitivity will make this jour- ney smoother and more successful. PCB007 Philip Carmichael is president of IPC—Association Connecting Electronics Industries Asia.