For most foreign-invested companies, the tough competition of local business operation largely comes from the nontransparent market which is mined with puzzling regulations and culture barriers

A reporter receives a press release and gift package at the sign-in desk of a recent news conference held in Shanghai by a foreign company. Many multi-national companies expect a significant increase in their public relations expenditure in China to pave the way for their business operation, including giving local journalists free banquets and money gifts in the name of transportation fees.

REMEMBER the following tips if you are a foreigner in China and hope to strike home with your local business:

Tip 1: Before you come to China, don't have set ideas about this vast market, though it is widely regarded as one with high potential; prepare yourself with an open mind

Tip 2: Look for relevant sources of information and listen to them carefully about "what to do" and "how to do" concerning your business

Tip 3: ...Enjoy China.

Above are simple tips offered by Nicolas Musy, who is amid thousands of foreign businessmen in Shanghai, a city billed as a coveted business paradise in China.

A Shanghai journalist practises in a golf course in Zhejiang Province during a free trip offered by an overseas company.

Now board chairman of the still-under-construction Swiss Centre Shanghai, which is expected to offer business, information technology, exhibition and industrial solutions for small- and middle-sized enterprises, Musy has had more than 15 years of experience in business operation in China. In addition to his role at the Swiss Centre Shanghai, he also runs a knitwear factory in Suzhou of neighbouring Jiangsu Province.

"It's true that you can still apply your international business practices here, but you have to bear in mind the characteristics of local operations," Musy said.

"It's quite necessary for you to take things like local regulations and culture into consideration."

Many foreign businessmen like Musy often find regulations in China puzzling, although the country is stepping up its efforts to make the legal environment more transparent against the backdrop of China's imminent entry into the World Trade Organization.

While foreign-invested companies have only narrow access to domestic sectors like telecommunications and aviation, their operations are also fettered because of China's existing regulations in areas like foreign currency, import and export.

"A way around it is that you must have complete understanding of all these regulations or bounds, otherwise you will for sure run into obstacles or simply a dead end (with your business)," Musy said.

Although more than 2,000 foreign-invested businesses were added in Shanghai last year, posting a 35.9 per cent growth over 1999, nearly 1,200 such companies folded their local operations during the same period.

Insiders say many companies which failed to survive entered the local market assuming they would rake in cash, which was far from reality.

"It is, on a large scale, a problem of communication," Musy said.

However, compared with their Chinese counterparts which have wider and more informative local connections, foreign companies sometimes turn out to be slower in getting the information needed for their business.

"The fact is that even if you know the existence of those complicated regulations, sometimes you just can't see into them," Musy said.

Xia Zhongguang, deputy secretary general of the government-steered Shanghai Association of Enterprises with Foreign Investment (SAEFI), admits that much effort is needed to channel foreign-invested establishments with the much-needed local business know-how.

Though SAEFI collects and submits to its members a quarterly edition of local business tips, the information given to foreign firms on government regulations leave much to be desired, Xia said.

Though expected to be a bridge between local foreign-invested businesses and the city government, the association has yet to establish its own website to provide companies with updated information, a vital part for their successful operation.

"We are doing our best to meet their expectations, yet they are often dissatisfied (despite our efforts) because our starting point is quite low," said Xia, adding that SAEFI is hoping to launch its own website later this year.

"In China, business information is not as transparent as expected and you may probably come across difficulties collecting all the necessary information," said Daisy Dai, a senior consultant from Accenture Company Shanghai.

That is why many Chinese companies prefer to maintain their old ways of business operation instead of setting up a high-tech information system which can be updated periodically, Dai said.

However, not all foreign-invested companies take it as a "Mission: Impossible" if they have to seek various information sources, especially government agencies, in a bid to ensure a satisfactory business operation.

"You have to get along well with every party concerned with your business: the local government, business partners, the community..., it is a must for you to communicate with them; you have to let them hear your voice and understand you," said Li Fengjiang, president and chief executive officer of OBI (China) Management Systems Co Ltd.

Li's company is a wholly owned subsidiary of the Germany-based OBI Heimwerkermaerkte AG, Europe's second largest retailer of construction materials and garden decoration products. In March, OBI announced the opening of its 100th and 101th overseas hypermarkets in the city, following the set-up of its Wuxi outlet, OBI's China debut last year.

As a native Chinese with more than 20 years staying in China, Li seems better poised for coping with what is thought of as complicated affairs involving local government agencies.

"The point is that you should take it as a natural and humanized thing when dealing with those government bodies," Li said.

"You can't embarrass those officials by sending them valuable things as a gift, and you are not supposed to beg something from them."

"If you show self respect, they will show respect for you," Li noted.

Li revealed that nearly 20 per cent of his daily arrangements are for socializing activities, but that is surely not a useless chore as he goes to such activities with problems in mind and, after proper communication, things can often be well settled.

And money, disguised as some public relations expenditure, does pave the way for some foreign companies.

The Sweden-based ABB reportedly poured in some 400 million yuan ($48 million) as PR expenses to establish a "relationship" network before it formally launched its business in China.

Insiders say, by whatever means, foreign-invested companies will still head for and explore the largely untapped China market.

"The market is full of opportunities for those who know how to handle them," Musy said.