Tip1. Design a clear strategy
Don’t go to China just because you have heard that the market there is growing faster than in the West. If you only want to go to China for the GDP growth, stay at home! You will only end up in a price fight that you are sure to lose.
Tip 2. Have an edge
When you design that clear strategy, go and look for a competitive edge other than costs as you cannot win a cost battle. Aim for extra value that determines a higher price. (But this does not mean that you can charge whatever you want).
If you have an edge, come equipped with solid data that easily proves that your product is better than the cost leader’s offer. Your word alone will not do.
Tip 3. Try
Things in China move quickly, probably too quickly for your regular strategy planning and budgeting process. If you follow the regular route, your local competitors will have simultaneously tried and tested three approaches by the time you have finished putting your PowerPoint presentation together. And while two of them might have failed, the third probably worked.
And even if it didn’t, your Chinese competitors will have gained valuable customer insights and won new execution capabilities while you were discussing those PowerPoint presentations with expensive consultants thousands of miles away.
Remember, incubation is a crucial innovation step. When the speed of change is high, as it is in China, you need to get in the game and take some controlled risks. Just make sure you only turn to the next phase if you are sure there is a customer need that you can fulfill, with a solid margin for a reasonable amount of time.
Tip 4. Don’t do it all yourself
Building capabilities takes time – a luxury you don’t have in China. Try to find a local partner or buy a local company. Sure, you will encounter the typical issues, but you will also gain those much-needed capabilities faster than when you follow the ‘do-it-yourself’ route.
Tip 5. It’s not only about the product
When you build your price premium, look beyond your product. Many Western (and even local) companies that are successful in China today attribute their success to a strong marketing and sales focus. Many industries are still in the early stages and there is a strong requirement to create the need and educate the buyer about quality.
How? Develop a strong sales story (easier when you have a strong brand), one that inspires people, is easy to remember and sexy to others.
Tip 6. But don’t forget the product
There’s a high probability that the customer needs for your product or service in China are different to those in other regions. Don’t be foolish and think they will adapt their needs to suit your product – sales and marketing can only go a certain way. Get out there and capture local needs.
Let me give you an example: on the flight home from Shanghai, I had an interesting conversation about consumer insights with Rolf Specht from Mercedes-Benz, my neighbour on the plane. He said: “As most Chinese businessmen have a driver, they have specific needs for the working environment in the back of the car. We find it crucial to find out exactly what they need so we can adapt our cars accordingly”.
My tip: if you have already a presence in China, make your local team responsible for collecting consumer insights. They probably need some educating as they might not be used to capturing market and customer intelligence in a structured way. Make sure you keep the process light. A copy and paste from the process in your home market will not work.
Tip 7. Don’t send your B-team
China is a tough market. It’s big, it’s unfamiliar and it’s changing at lightning speed. You need the right people to cope with this. You want your best leaders on the ground, not your B-team. Put your money where your mouth is and assign your best people to grow your business in China.
Tip 8. Headquarters. What’s your role?
You need to look beyond potential gain and be prepared to be in it for the long-term. There’s more to it than securing your next bonus. Manage stress, avoid copying and pasting processes and… keep it simple.
Remember: if every department in every region asks for KPIs and forms from the China team in order to be the ideal business partner, when is the real work going to take place?
Good luck with your Chinese adventure!
