There is a website called “China Solved” (
www.chinasolved.com
) that might be of interest to the many foreign business people thinking about entering the China market for the first time might find to be of considerable interest. The site is belongs to Andrew Hupert who has written two books about doing business in China,
The Fragile Bridge
, and,
Guanxi for the Busy American.
Mr. Huppert also offers an on-line class, “Negotiate Successfully in China”.
Currently on the “China Solved” website you will find an article entitled, “Chaos Under Heaven and the Opportunities Are Abundant”. Huppert maintains a very bullish attitude towards doing business in China and here just a little of what he has to say on the subject.
“A scary, intransigent Beijing can be great for American business.
Western planners have to stop sounding like Chicken Little warning about falling skies and start looking at the reality on the ground.
American planners have a bad habit of being overly skeptical about their own challenges and limitations and too ready to believe the PR of the competition. Chinese management is tactical – not strategic. They react and copy. American managers can counter this by planning on having Chinese steal their ideas — and using China as a laboratory. Western companies will find it easier to solve new problems than safeguard old secrets.
If you need an example from today’s headlines, just look at YUM and the mess that KFC is in because the chickens it bought from local farms were overloaded with antibiotics and hormones. YUM has thus far reacted typically – apologizing profusely and dropping its smaller providers. But Sam Su, YUM China, hinted at a more proactive strategy that could give the chain a sustained competitive advantage.
From the WSJ:”Mr. Su said in an interview t
hat Yum is working with international poultry suppliers to help them enter the Chinese market or to invest in China’s domestic suppliers to improve their quality. Yum will have future announcements on bringing additional poultry players to the market, Mr. Su said, declining to comment further.” If MNCs can safeguard the food supply chain (and succeed where the government has failed) then they will regain their market dominance – and price premium.
Cell phones are a great example of how typical MNC marketing is failing. Apple is having trouble in China because the cream of that market already has their 500 dollar phones. The mass market is willing to settle for 75% of the hardware features for 25% of the price — particularly when networks are providing all the benefits of ownership for free or pay-as-you go transaction charges. But cheap smart handsets aren’t something that only Chinese consumers want. The same thing is going to happen everywhere. We can guess now – in 2013 – that by 2015 most of all new cell phones will retail for under $200 bucks. Apple and Samsung can fight the future by fussing with expensive offerings and relying on an oligarchy of network providers to create barriers to entry, or they can study the free market laboratory that is China and get to the answer first.
As Western strategists, Chinese management techniques should be your biggest asset. When I saw the headlines about Chinese hackers plundering US databases I panicked — but I relaxed as soon as I saw it was the PLA. None of that stolen data will ever find its way to anyone useful. We keep telling ourselves that Chinese management teams are all warrior scholars with ninja hacking skills and the ability to see into the future — it’s just not so. When I worked with Chinese managements I was stunned by how reactive, unimaginative and stodgy they were.
In China, American brands may come and go, but Brand America is consistently strong and usually favorable. Chinese companies and institutions still judge their success and progress against the US yardstick — and our products command premium prices and high ratings. American marketers have learned to play to their strengths with Chinese consumers — but now business planners have to study the same lessons. Disengaging or delaying from China because the government is obnoxious or the regulations are unfair is ridiculous. This is your moment. What you should be scared of is a friendly PRC with a human face and a level playing field — by then it will be too late for you and your competitive advantages will be gone.”
You can find the entire article at:
http://www.chinasolved.com/2013/02/26/chaos-under-heaven-and-the-opportunities-are-abundant/
Hawkeye in China
– Lex Smith