China offers a big market and huge opportunities for Hong Kong firms, but it also presents a host of challenges for new entrants.
Firstly, one has to contend with intense competition as there are many players seeking the same pie. Next, setting up an operation on the mainland means adapting to a very different set of local rules.
On matters as basic as hiring people, there is plenty to think about, as a small logistics firm that is venturing into the Guangzhou free-trade zone is discovering.
The company is seeking to open a new office in the new trade zone in Guangdong province’s capital city, hoping to take advantage of cheaper local packing materials and tax breaks. But it has reservations about hiring local managers.
The firm’s Hong Kong staff always take pride in their can-do spirit, constantly looking for ways to speed up goods shipments to meet customers’ tight delivery schedules amid changing market dynamics.
“In general, mainland staffers tend to look for ways to cut corners and do the minimum work. They also hardly take the initiative to look for a better solution,” a company manager said, summarizing his experience across the border.
Given the situation, the firm prefers to employ local Chinese workers only for the junior posts while sending someone from Hong Kong to oversee the new operation.
Other companies also point to various problems.
An IT company, which is in the process of setting up its first China office, says its primary concern is quality and security.
Mainland labor is indeed far cheaper, but there is less assurance about their work quality, the IT firm owner said.
“The worst nightmare is leakage of information,” he added.
If a mainland programmer takes away sensitive data like source code or client database, it could cause the company serious damage.
The IT firm told EJ Insight that it will most likely start with small clients first and see how things work out, before planning the next move.
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