USA: The Best Choice for Markets and Partners

In the context of the global economy, we should not only focus on promoting domestic business development, but also look to the world and establish trade relations with other countries. The trade relationship between China and the United States occupies the most important position in the world. The United States is becoming the best choice for many Chinese companies to invest in. The heavyweight guest of the China-U.S. Manufacturing Forum, former Deputy Secretary of the U.S. Department of Commerce Francisco Sanchez, discussed with everyone how to build a successful business partnership in the United States. The following is the content of his speech:

Several recent high-profile cases, like Huawei and ZTE, have caused repercussions in China and the United States. Whenever it comes to companies in sensitive industries such as the communications industry, there will always be problems, but such problems are not the same as the United States is not interested in Chinese investment, or does not encourage everyone to invest. The United States attaches great importance to national security, so the US government pays great attention to these two companies. However, it can be said that most Chinese companies can invest in the United States without going through the US government's review. You have to set up a company, you have to complete the registration, every company has to do this. You can go through these procedures quickly. Some companies do require government scrutiny, which is the responsibility of CFIUS (Committee on Foreign Investment in the United States). Most of these vetted companies can also be approved. In fact, we not only hope that you will invest, but also hope to strengthen the business relationship between the two countries. In the context of the global economy, we should not only focus on promoting domestic business development, but also look globally and establish trade with other countries. I dare to say that the business relationship between China and the United States occupies the most important position in the world.

Q: We are seeing a lot of investment coming into the United States. This is especially true after Canada stopped investment immigration. 45,000 Chinese applicants were turned away. Also, early Chinese investors going to the U.S. mostly failed. What's the reason for this?

Answer: A case study must be done to fairly view early investment failures. Let me introduce the general situation. No matter what country the investor is from, if you fail to assemble a team that understands the local market, you will be at a disadvantage. Not only a disadvantage, but in fact you are at great risk of losing all your invested capital, or investing a lot of money with little return. What is a good team? The biggest advantage of investing in the United States is that we have a strong legal system. To take full advantage of this advantage, you need good corporate counsel, or you will be at a disadvantage. This kind of consultancy is expensive, but I can guarantee that if you find the right provider, whether it's legal, financial, or a team of consultants who understand your local community, you'll be reap the rewards of your business going forward. A company comes to a market they don't understand, and it has to build a team like that to be successful.

Q: We've been talking about large companies just now, so does your advice apply to SMEs as well?

A: These recommendations apply especially to small and medium-sized businesses. If you are a large company, after a failed investment, you have a lot of resources to easily recover. For small and medium-sized enterprises, making mistakes in the process of entering the target market may lead to a total loss. The vast majority of businesses in the United States are small and medium-sized enterprises. In Dothan, I think SMEs are the main driver of employment in the private sector. Just as most local businesses in Shunde are SMEs, SMEs are a new force in the business world, whether in China or the United States. My advice to SMEs is the same as for larger companies, be sure to form a suitable team to provide you with all-round assistance on local market and legal advice to ensure the success of your overseas investments.

Q: Can you sum up this business wisdom in one word?

A: As a government official, I never use one word to sum up, nor two words, I have to say a few more words. Be brave to go out and explore business opportunities, but do so with caution and not reckless.

Q: In addition to bravely going out, can you share some cultural and management advice? You have worked as a management consultant for Western companies, teaching them how to negotiate. Can we think that what works in China also works in the US?

Answer: For American companies that come to China, my advice is not to think that the way they operate in the United States is applicable to China; I give the same advice to Chinese companies, don't think that the successful local model can be replicated in the United States. It is true that some practices are universally applicable everywhere, but not necessarily all. So, when you come to a new market, don't think that you are successful at home and therefore know what to do abroad. My advice to you is to question your assumptions. It does not necessarily mean that your assumption is wrong. After questioning and testing, this assumption may be correct, but it should be questioned first, especially when you go to a new market such as the United States.