China: 5 Things You Should Know

With the largest-ever World Expo having opened May 1 in Shanghai, and with countries and corporations spending millions in dollars, euros, and other currencies to impress their Chinese hosts, it’s a good time to remind ourselves of the great opportunities as well as the great walls (sorry, couldn’t resist) that are part of doing business in The People’s Republic.

Here are five first-hand experiences that I believe are useful to keep in mind.

1. What happens in China stays in China
It’s very hard — almost impossible — to do business in China if you’re not an indigenous enterprise. Whether you’re looking to open a small corporate catering company (as an Aussie acquaintance has been trying to do for more than 18 months) or penetrate the market as a multi-national pharmaceutical company, be prepared for a Byzantine, interminable slog.

So how do companies investing in China reap the windfalls they report? In many cases, these companies are in partnerships with Chinese entities. And the international marketers who come into China through these partnerships, investing copious amounts of financial and intellectual capital and shouldering most of the risk, find that they are still the submissive partner in the relationship.

While this relationship might be blessed by those in Western C-suites, the rank and file — even those at relatively high levels — often don’t get the memo about the new set of rules that come with a company’s commitment to make it in this market. If you’re leading your company’s efforts in the China market, avoid wasting time and money by having the right people know they’ll have to be more flexible than usual in managing the expression of your brand.

2. Control freaks don’t survive
I recently heard one corporate marketing executive based in the U.S. complain that while his globally recognized brand was being “mismanaged” in China (he used a slightly more colorful term), it was still his company’s most profitable market — and he hoped his suggestions about how to present his brand in the region might be implemented. He refused to acknowledge that the price he was paying for those outsized profits included this loss of control. I told him that once he shifted his perspective he would give himself the freedom to see the China market as it really is, not as how he wishes it to be.

With an environment more responsive to price than attributes such as design, quality and durability, China is still a market where customers are conditioned to single-transaction engagements and less accustomed to the long-term brand relationships. Those brands that survive and thrive will take an evolutionary (not revolutionary) approach to the market. Being patient, allowing the transformation of the Chinese market to lead your efforts — and being a “fast follower” — will be keys to success.

Bottom line: don’t give up.

And here’s the deal for agencies: Unless your agency was born and bred in China, your only sane play is to create an intra-China network heavily staffed by Chinese nationals and Western, Chinese-speakers. Your business plan must be about bringing Western brands to China and/or bringing Chinese brands to the West. If you believe you can grow a “Chinese agency” that will pitch and win Chinese business, you’re fated to fail.

3.  Tactics still lead strategy.
In my experience, the Chinese marketing workforce is still much more comfortable with tactics than strategy, more at home in the world of execution than concepts.

This is not only a challenge in China. However, in China the challenges are a bit more pronounced. I feel it’s due to circumstances including an enduring legacy of the Cultural Revolution. Also, too few Chinese students are enrolled at Western universities where marketing is a more developed area of study. But the numbers are growing and will make China a more innovative business culture — the only way the burgeoning Chinese middle class will be able to sustain its standard of living.