Here are some additional questions and thoughts to consider:

How do you determine that there is a market for your product in China?
The one word answer is: Research. As China's economy develops, different markets are emerging - even different economies within the market. For example, Shanghai certainly bears little resemblance to the poor areas of the north-west. Each potential market needs to be carefully researched upon which entry strategies can be developed. You must determine which area of China you should execute an entry. Typically, you should start by considering Beijing, Shanghai and Shenzhen. From there, you may discover that the business you are dealing with has opportunities, facilities and markets in other major Chinese cities.

Your strategy certainly depends on your particular industry. Different parts and cities of China will have a different industry presence. It is easy enough to contact the Government ministries and departments for both countries who can supply you with this type of information.

Where do we start in a country this size? What strategy should we develop?
Indeed, China's population size of 1.3 billion is overwhelming. Further investigation reveals what you really need to know. Namely that there are approximately 250 million comfortable, lower to upper middle class Chinese consumers. Beijing, Shanghai and Guangzhou are the three leading Chinese cities. However there are many additional high population cities with substantial middle income populations and steadily increasing income levels. Forward-thinking companies recognize that success rests on the need for a cohesive strategy and plans. This also requires a proper understanding of Chinas particular business culture and practices. China, of course, is not one big market but a myriad of diverse and expanding markets. Each sector has its own particular attributes. Many companies keen to enter the Chinese market have experienced frustration and bureaucratic delay, frequently resulting from ineffective communications, lack of transparency, unclear procedures and policies, inappropriate relationships and a general failure to comprehend what motivates the Chinese marketplace. Developing clearly defined plans and strategies before you arrive and deploy will define the quality of your experience and results. Companies that have yet to gain a foothold in the country have great potential, yet face a number of important issues and challenges.

With whom do we work? How do we find a potential partner? How do we know how good that partner really is?
I often think of the 11 years I spent as a corporate trainer and consultant in the United States, before I began living overseas in China. Looking back, I realize that I had attempted to develop quite a few serious client relationships and partnerships, many of which did not work out, develop or continue for the long term. I know many talented professionals with outstanding resumes who interviewed with many companies before finally being hired. I believe an experienced businessman would say that is not unusual. It is often simply a numbers game. So, if you are now considering developing a relationship with a partner in another country, you should expect to face the same situation, complicated even further by distance and cultural differences.

The good news is that there are many established personal routes, business venues and government office protocols which exist specifically to aid you in the process of identifying and meeting potential partners for business. Did you know that certain Government organizations will actually arrange and promote your public seminar free of charge introducing you to the local market?

The Government consulates of many countries have departments in place whose role is to assist companies in exporting their products and services overseas. The United States has the Foreign Commercial Service division of the State Department. Every major country also has a Chamber of Commerce whose role is to facilitate business relationships and provide resources related to business development.

Personal friendships and colleagues are often the best place to start. I have a Chinese partner based in Chengdu to whom I was introduced by a mutual friend. My mutual friend and I had a high regard and trust for one another. His relationship with his Chinese friend was also of high mutual respect and trust. In introducing us, there was a good foundation for a quality relationship.

Cultural Differences?
Being an American, I easily notice how Americans love to make the claim that a particular trait is based on culture and I listen to my Chinese friends say the same thing. Nowhere is this generalization more abused and inaccurate than related to finding a foreign business partner. I remember several years ago our family and business accountant telling me that you should approach a possible partnership in business with someone the same as marriage - a serious, long-term arrangement based on a very good relationship, with legal and emotional ties that bind for a very long time. That is a wise perspective to consider. There is no substitute for slowly developing the relationship with potential partners. The longer a relationship lasts, the longer it is likely to last. A relationship always reaches particular moments in time which test the relationship, the intentions and integrity of each individual in the relationship.

Each time you reach and successfully pass through one of those moments the relationship usually gets stronger and has greater chance of continuing longer and longer. In the beginning, people must get to know each other, determine that they have similar values, ideals and goals. There is no substitute for the time it takes to do this. At the same time, as the relationship develops, so can further trust and understanding. This process is not unique to China or any other country. In fact quite simply, since you are doing business in a foreign land with a different culture and set of rules, it is even more important to personally get to know who you are doing business with.

As a foreigner you must also understand that in China, people often keep their thoughts to themselves. This is true for some particular reasons. First, in terms of life philosophy, they are encouraged to be more reserved and humble in character, not boastful. Second, in Chinese society and political systems there has been more focus on the value and needs of the community, not individual thinking, rights and ideas. Once a Chinese person says something, it is now in public, no longer private, and out of their control. Third, the destruction and oppression which occurred during the Cultural Revolution is not in the distant past, only one or two generations away, affecting many peoples attitudes and values in terms of openness and trust of others. Many of todays adult generation were young children during very difficult times of oppression for their parents and related family.

Who can provide independent assessment advice on the history, reliability and asset base of a company?
There are many market and company research and consulting firms who can assist you by providing detailed company information. In addition, it is possible to gather this information through various Government organizations and ministries which have been set up to support foreign trade and investment.

To preserve our interests, can critical functions like financial controls (to Western standards), interim management and security be acquired, independent from our Chinese partner?

With China's entry into the WTO and continued opening up policies, more and more management, distribution, support and other control functions are able to be handled directly by the foreign enterprises. This is an area undergoing constant evolution and which varies from industry sector to sector.

What other types of difficulties have foreign companies encountered when setting about approaching the Chinese market?

1. Language and cultural issues are the obvious difficulties. Often you must have a qualified interpreter and guide. Dinner banquets, drinking tea, business meetings at companies, casual visiting can all seem to have ritualistic qualities and etiquette which can seem confusing at first.

2. Bureaucracy. The Chinese government is committed to a socialist free market economy. With the great progress which has been accomplished in the last 20 years, especially the last three years, there is still a long way to go. For example, in attempting to establish your business, the schizophrenic split between Central Government planning and the free market can produce inconsistency and confusion, referrals from one department to another in the search to find who is the right person and what is the right procedure. The key is knowing who's who and who does what. Such simple advice often bears great truth. In China, as you MUST learn, such matters are often solved more easily by "guanxi", which is the network of resource and contacts here that has unique, deep and ritualistic qualities.

What are some of the current particular obstacles?
Non-tariff measures frustrate foreigners trying to do business in China. Quotas, some of them not even published, are slapped on many imports. Quality inspection is tougher for foreign-made goods. Even if the goods are allowed into the country, they are at the mercy of state run distributors. This can be a complex and difficult situation, which is also highly fluid. This requires continual monitoring in order to have the appropriate connection to neutralize the negative impact of bureaucratic action or inaction.

So again, what are the best answers to overcome these types of issues?
Quality relationships with those who are involved in the process of doing business. Help from other business people who are experienced here. Legal help from experienced attorneys familiar with your particular needs and issues. Government organizations and ministries. Companies like our firm China2go who are in business to support such business activities.