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March 7, 2012

Making it in China

Posted by Anand Prasad Arkalgud (View Profile | View All Posts) at 11:03 AM

china.jpg

"OK, so what's it like to do business in China?" This must rank among the world's top questions. People ask alright, but don't really want to listen to your detailed answer. So, here's my 2 minute China capsule for when you pop the question.

When people think China, they see red. They see exotic foods and flavors. Chinese lanterns and dragons. But what enthuses and drives China is not only tradition. Popular culture has a significant impact as well. Increasingly, this is fueling Chinese aspirations. A decade ago, China was proud to be the world's largest exporter. Today, it dreams of being the world's largest. Period. It is the largest market for luxury goods, and as many manufacturers will tell you, also one of the most profitable. To the uninitiated, language appears to be a barrier. But I can tell you, from experience, that my Chinese hasn't improved much in my 3 years in Shanghai because everyone around me wants to speak English!

Big. Really big. Everything about China is humungous. See how their railways leapfrogged decades of incremental evolution to build the world's only train that runs on magnetic levitation. Their gigantic cities were made in just 25 years. What this means for businesses is that we must build to scale to first get into the reckoning set, find takers and then stay ahead of the curve. In the Chinese lexicon, it does seem that big equals great.

Take a look at the Fortune 500 list from just 20 years ago. You'll find an incredible 75% of the names there are not on the 2011 list. Ironic, when you think about how much enterprises invest in "building to last"! With the "let's build to last" mindset also comes our default approach to fortify readiness for challenges and opportunities from the same quarters we've always seen them come from.  Obviously, this approach won't get us very far in a market like China. Now, what if we focused, instead, on letting its changing landscape shape and reshape the enterprise we build to adapt? We can then let our business and strategies be moulded for success by the very forces of this dynamic market. But this alone is not enough.

50 years ago, consumerism in China was driven by manufacturers. Two decades ago by retailers and today by consumers. That's why we must look beyond and begin to create products and services that the Chinese are only just beginning to dream about. By building willingness to be led by these consumer aspirations, our businesses can then adapt to thrive even in a distant tomorrow when current demand and market share would have long ceased to matter.

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