LinkedIn “China Business” Group Discussions
On “China's Megatrends (中国大趋势)”
There are many challenges ahead before China can gain sufficient momentum to realize these goals as mentioned in the megatrends. The three core focuses should be:
(1) uplifting its SMEs to be the growth and innovation engine (like in Silicon Valley);
(2) building its middle-class to be well-educated master of its own destiny (like Nordic countries); and
(3) nurturing its consumers' power and rights to drive innovative developments of products and services in an open-competition environment by merits but not monopolizing relationships (like in US electronic and IT industrial sectors).
Food for thought!
 
On “Top 3 secrets why global internet company lose in China”
Comments on January 5, 2010:
 
Thanks to all the participants, this discussion has been very interesting and meaningful promoting better understanding on how business works in China. I have been traveling to China and observing its developments through different stages since 1983. I can say China has been extremely dynamic and rapidly evolving: A few years ago, Shanghai looked different every six months; now it is Tianjin's turn. Many foreigners came with their preconceived notions of what China should be and failed to equip with the proper paradigm to truly localized -- too much "garrison mind-set with walls" as well as legal teams and protections. If one is committed to the local market, one should blend in with the local -- understand one's customers, the government regulators, the local supply-chain partners and so on - and the most important of all create one's own local business ecosystem for long-term sustainable developments. The glass can be either half-empty or half-full! 


 
I would like to bring out a few key points for references: 

1)         Understand the internal competitions among different regions of China: 

China is definitely not homogenous. Different regions have their distinctive characteristics, customs and business mind-sets. Pearl River Delta, Yangtze River Delta and Bohai Gulf Region (the 3 leading China industrial development regions) are quite different and in different stages of development. Of course, there are severe competitions among those regions for FDI, favorable central government policy supports, high-tech projects and talents, etc. 

2)         Understand local government regulators and their motivations: 

Competitions among neighboring municipalities are tough as well. Government officials have "hard quotes" (like GDP, # of signature high-tech projects, etc.) to meet within their 5-year terms for their career advancements up the "power pyramid". Of course, everybody focuses on the low-hanging fruits and harvesting (no planning or new business venturing) in the last 2 years of his or her term. Furthermore, they are looking for new ideas and value-creations to up-stage their competitions. If the Westerners' value propositions remain unchanged over the years, the officials would lose interests. 

3)         Understand the pace of development and decision-making: 

The severe competition leads to the fight to take the lead. There is a common saying: When one sees "green light", one rushes through. When one sees "yellow light", one speeds up the get through (instead of preparing to stop). When one sees "red light", one never stops but looks for a detour to circumvent the situation. That is the mind-set of many the local government officials. 


 
I don't mean to encourage Westerners to take the lower ethical path. But, I would strongly encourage Westerners to look into their value propositions and update them with new value creations to keep pace with the dynamically evolving China situations, regulators' preferences as well as customers' needs and expectations. The dynamic nature of China market requires definitely a different set of playbooks and a whole new paradigm!
 
Comments on January 6, 2010:
 
Definitely, we should limit our discussions on proper business strategies and approaches. Venturing into socio-political and ideological discussions may not be helpful since the focus of this group is "China Business". 


 
China is full of paradoxes from the perspectives of Western economic models and conventional wisdoms. China is a developing country, yet a PRD city called Fushan with a population of about 5 millions has about US$70 billions in saving accounts. It is hard to find cities of developed countries with such high saving amount, let alone a developing country. Many multinational corporations made US$ billions profit from China like Motorola, Nokia, VW, and so on. GM China is the most profitable and innovative among all GM divisions. It is given that everybody has to deal with the government regulators and bureaucracies in China. Why some Westerner corporations can hit gold mines and some are sinking in quicksand and what the key factors are dictating the favorable outcomes should be the focus of our discussion -- for our knowledge sharing. It is pointless to complain the cup is half-empty (life is tough anyway!) and it can be more fruitful to figure out how to make it full. 


 
When we see a paradox, that implies some of our underlying concept and/or assumption do not reflect the reality. It is time to reexamine our playbook and paradigm. China has about 2.5X the population of EU and 4X that of US and with perhaps 20X the population density. The internal competitions and potentials for conflicts are many times more severe. It is a miracle that China can feed its people so well. Image the social conflicts in US if its population is double to 600 millions! 


 

It is a fatal business mistake to over-generalize China and look only at the surface phenomena without probing into its network of "underground canals". If one can be fully committed to localization to get in tune with the local clientele and supporting ecosystem like GM China did, the market success in China is reachable!
* Original file is attached.