China, the final economic frontier, the world’s second-largest economy and a region with over 1.3 billion people, is a force to be reckoned and a partner, competitor and/or fellow superpower that must be fully understood, its policies be surgically dissected and its ambitions be fully respected.
Over the course of 2018, this series titled “Why China Matters” will examine China and its people in practical and anecdotal terms. While some of these comments are limited to industries with which I have had direct and personal involvement and engagement (media, consumer products, IT, manufacturing, medical and pharmaceutical, automotive, lotteries, home shopping, apparel, and others), often there new frontiers I will be exploring and sharing with this audience which I hope will be engaging, controversial and incite conversation.
Let’s face it, the Chinese people and the Chinese government have money, and lots of it
As the title of this series queries, Why China Matters: it matters because this country, my country of such populous and hardworking people are trying to exceed and excel in every way or form, and with this kind of ambition, you have a formidable partner or competitor, depending on which side of the equation you are on. Either way, it is sage advice that every strategist must keep in mind: you must have a dedicated China strategy, even if the strategy is not to enter China at this time with your products and services. The latest central government policy of encouraging innovation is the kind of healthy policy that invigorates competition, loathe copycats, and pushes the millennials to venture into realms of science, medicine, clean tech, health services and technology and advanced manufacturing with government incentives and support. Let’s face it, the Chinese people and the Chinese government have money, and lots of it. Almost daily there are investment tours by senior officials and private entrepreneurs to the US, UK, Canada, Australia, Germany, France, Africa, Brazil and the like – looking to buy technology, collaborate on new technological frontiers and to find ways to build on already a solid platform of technology and innovations. Likewise, groups from China investment clubs, incubators, angel investment groups come to China to look for these very same investors, with vision, foresight and more importantly, the patience and understanding of the technology and what it can mean to a nation with such big appetite.
China is not a thief, but like every honest man or woman, given the opportunity indiscretions will occur.
In preparation for what will be a “two-man relay race”, a healthy alliance and competition, like any good game, the “visitor” better be prepared because the game will be played on China’s home court, with all the home court advantages. This doesn’t mean the home court advantage is unfair, because it isn’t, but it does mean that the “visitor” should be well prepared with all the right ammunition: IP protected, marketing strategy honed for the local market, distribution and manufacturing alliances assured and repatriation of profits rules thoroughly understood and ready to marshal. As an old hand, I can’t stress enough the importance of having a complete strategy – marketing, legal, manufacturing, repatriation, employment, sales, real estate, tax, and political risk assessment. These are the variables of doing business in China but those who can maneuver through it will find success beyond their wildest imagination. China single-handedly saved “GM” during the hard times, invested in Smithfield worth billions, bought brands that are beleaguered and revitalized them: Geely’s purchase of Volvo, Lenovo’s acquisition of IBM’s Thinkpad business, Tengzhong’s purchase of the Hummer brand, LeEco’s acquisition of Vizio, and the list goes on.
Why China matters?
Why China matters? It matters because it was a sleeping dragon, but the dragon is no longer staying put. China, as stated in the Mao’s Red Book, is a country of contradictions – both a friend and a competitor, an ally and a rogue alliance, a buyer and a seller. In this series, we invite you to comment and contribute. Our hope is to generate conversation and when that happens, commerce flows, energy and synergies are generated and the opaqueness becomes transparent so that a spade is called a spade. Whether it be the A-bomb on North Korea or the F-bomb on China, we hope both can be avoided through understanding of where we are and where we are going. Even if the final destinations are different.
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