Three Truisms for Success in China

Most private company owners staying at James Reilly's hotel near Shanghai echo the same sentiment about building a business presence in China: "They're frustrated in the beginning but once up and running, they're relatively happy."

As the CFO of Solatube International, a producer of tubular daylighting devices, Reilly began sourcing solar panels in China two and a half years ago.

After finding he could manufacture the panels cheaper in China, his company entered the domestic market this past February by opening its first light manufacturing facility in Suzhou, a city an hour west of Shanghai. The business park Solatube moved to, which houses 130 Fortune 500 companies like Honda (HMC - Cramer's Take - Stockpickr), L'Oreal and Caterpillar (CAT - Cramer's Take - Stockpickr), stands as compelling proof that everyone who is anyone is staking out China.

For Solatube, being in China paid off when it was hired to install its product in one of the arenas for the 2008 Olympics in Beijing. But like any foreign company that's reaped Chinese rewards, it has faced the same cultural clashes that have taken others down.

Chinese law changes almost every month, so if you modify your business model, revisit your business plan, recommends Alexander Pan, a tax partner with PricewaterhouseCoopers' Private Company Services practice. For instance, don't just assume the labor laws you have been following will suffice if your work force grows.

To avoid culture shock for your small business, memorize these three Chinese truisms.

1. You Can't Please Everyone

"If you're in bed with the government, you're better off," Reilly advises. That sounds easy enough, but when every rung of government (from local to national) has its own power base, sidling up to them all becomes a juggling act.