In the second of a three-part series, Clifford Coonan advises Irish companies seeking to take advantage of the Chinese market on the importance of logistics, linguistics and culture.

Having decided to come to the Chinese market, either to take advantage of low costs for export or to explore the country's huge domestic market, the next stage for an Irish company will usually be getting products in, or out of, the country or getting its services into the marketplace.

China's rapid advance from a tightly controlled, centrally planned Maoist economy to a free market - liberal on economic issues and opening up at a cracking pace to foreign trade - is one of the most significant events of the past 30 years. This has translated into a much easier trading environment for foreign companies in China. Shipping terminals and airports are going up fast, procedures for bringing goods in and out are being streamlined and demand is growing.

But as the Beijing leadership never tires of telling its EU and US counterparts, China remains a developing country and this means logistics, linguistics and cultural issues still need to be addressed by anyone serious about succeeding in China.

Exasperated company reps tell of nightmares at container ports near Shenzhen or Shanghai waiting to get clearance for their goods sitting just feet away, with only sign language to communicate their frustration to uninterested officials.

HSBC uses the image of a Western businessman politely forcing down portion after portion of snake soup at a cheerful banquet so as not to offend his Chinese hosts and would-be business partners, having misunderstood that in China, finishing your dish means you want more and leaving a little on the plate is the polite way of saying you've had enough.

"It's hard to find a toilet in China unless you speak pretty good Chinese. This is a sobering fact and therefore puts into perspective the difficulties of doing business," says Paul O'Driscoll, co-founder of the property investment group Investors in Asia and president of Ireland Network China, which functions as an informal chamber of commerce for Irish companies in China.

"It is important to be able to introduce yourself, your company and indeed your country to customers and partners here in China. Gone are the days when foreigners were a total mystery and 'we all looked the same'. Individuals make a difference in all different types of business and China is no exception," says O'Driscoll.

"Having Chinese speaking skills - be it a consultant or a member of staff - is important. Irish companies would be well advised to plug into the expanding professional Irish community. They should seek the advice of one of the many enthusiastic Chinese-speaking people in the community and use their services," says O'Driscoll.

Another founding partner of Investors in Asia, Patrick Parsons, has a long association with the Chinese property business and speaks excellent Mandarin Chinese, which made dealing with developers, banks and tax authorities easier for the company. "We are a local company as far as they are concerned," says O'Driscoll.

Chinese businesspeople are pragmatic but a knowledge of geography and recent history and culture can help speed up relationship building. Food is central to every sphere of activity in China and doing a bit of homework on table etiquette can also help win respect, though don't worry if you can't handle chopsticks.

"It is also important to remember that Chinese people are extremely proud of China, its history, the economic reforms of the past 20 years and its current economic boom. A dinner time focus on press reports of exploitation of workers in a southern China factory, although a sign of being informed and a good dinner topic in Ireland, should be avoided at all costs," says O'Driscoll.

"Apart from that, just go for it. There are no real barriers. There is no excuse for rudeness but being clear about your intentions in a direct way is a sign of strength that will save you time and money. Chinese people do not expect you to 'be Chinese' and the fact that you are not Chinese and have some expertise, product or access to a market that they cannot have is your value," says O'Driscoll.

Nicole Bernard runs the consultancy Slí siar, which she co-founded with former Iona Technologies chief Chris Horn, who set up the Ireland China Organisation in 2000.

One-time head of Iona's China operation, Bernard is a former Kodak executive with 11 years experience in China and a track record of establishing start-ups in China. She says the key is to follow through with your plans.

Some companies come to China with inflated expectations about how big, how fast, and how easily their business can grow. They sign a few memorandums of understanding with their potential Chinese partners and clients and return home expecting the rest to fall into place.

"In spite of the rapid improvements in communication and increasing efficiencies in China's business environment today, this is still very much a culture that requires frequent face-to-face communication and commitment at a local level in some form," says Bernard.

"Some of the best success stories I've witnessed in China are those of the entrepreneurs. There are some incredibly insightful, amazingly courageous individuals who make some good business ideas work in this country," says Bernard.

One fit-out and facilities services provider saw a demand for his services due to the fact that so many companies were entering China and setting up offices.

Typically, when you set up shop in China, you start with an empty concrete space and all of the fit-out and decoration is your own responsibility.

"This person is running a busy, profitable business providing high quality fit-out services for companies establishing new offices in China. Good cost management, excellent access to local labour and materials, bilingual services and outstanding project management have made the business successful," she says.

"The lesson: find a good business idea, a latent market need, streamline your operational efficiency to deliver your goods and services, and manage costs to support healthy, stable growth." She adds that people should continuously check to ensure that the good idea of yesterday still makes good business sense today. The market in China changes rapidly.

Getting the right staff is crucial. Counterintuitive as it may sound in a country of 1.3 billion people, most of them in the poor countryside, finding the right people is a big issue. Locating staff was named in a recent American Chamber of Commerce poll as the number one issue for foreign companies in China.

Once these decisions are made, it's time to move the products or services. Transportation and logistics is a major issue - how to get production out and raw materials in.

Chinese companies would typically have their own trucking divisions, while foreigners have to look to third party logistics. There is a shortage of high-quality logistics providers in China and they are expensive. By some estimates, logistics in China costs two or three times more than in the United States and this is an area the government is working to fix.

The jury is still out on whether Irish companies should focus on the big cities such as Beijing, Shanghai or Guangzhou or look at the smaller, "second-tier" cities and the interior.

The last decade has seen the emergence of these second-tier centres. Although the expression "second-tier" suggests big towns, these are substantial urban centres with populations of five to eight million. Places like Dalian, Tianjin, Xi'an, and Chongqing are becoming attractive as international markets.

The experts recommend looking at these cities. Household appliances manufacturer Glen Dimplex chose Shenyang and the decision worked but it acknowledges that selling to the second-tier cities can be difficult.

A step-by-step approach has worked for big international firms like Procter & Gamble and Unilever, which built up local strength and expanded nationally afterwards, province by province.

The second-tier cities are cheaper and often relatively unexplored in many market segments, though that is changing fast. And these cities are growing in sophistication, though there might still be the occasional bowl of snake soup to contend with.