Successful Business Practices In China

By M. Isi Eromosele

In the 1990s, Deng Xiaoping’s famous phrase mo zhe shi tou guo he, or “crossing the river by feeling for stones,” resonated throughout China. For many who participated in the growing pains of China’s economic transformation, an experimental, learning-by-doing approach paid off.

US companies that carefully managed risks such as inadequate infrastructure and regulatory uncertainty, even while taking advantage of China’s manufacturing prowess and market size grew accustomed to reaping rich rewards.

Today, as new patterns of growth, investment, and consumption emerge in China, especially in the aftermath of the 2008-09 global recession, Western companies need to adapt to change by developing a more nuanced understanding of China’s dynamic sociopolitical and cultural processes.

Become Adaptive and Agile

Global companies doing business in China need to adapt their brand essence to the local market in a way that offers distinctive value. They have to expand their presence throughout the country, reaching far beyond the prosperous cities of coastal China.

Thanks to a combination of government push and market pull, inland China is emerging as the new epicenter of the country’s growth. Recognize that just as Chinese corporations are competing against one another, so are Chinese provinces and municipalities and that opens up new windows of business opportunities.

There is a clear difference in operating styles when you compare Beijing and Shanghai. A company’s approach should be to adjust expectations as they move farther west of China. They have to invest more time and effort in these regions to educate people about the value of developing mutually beneficial propositions at mutually acceptable costs.

While they actively engage regulatory touchpoints, companies need to go beyond the letter of the regulation, with an understanding of the human element surrounding that. In China, that often means partnering with central and local authorities in supporting priorities such as maintaining social stability through steady employment and improving the environment through more efficient use of resources.

Collaborating and Competing

There is a pragmatic appreciation in China for how collaborating with the U.S. will accelerate development and fulfill the aspirations of its fast-growing middle class. It is, however, equally important for companies doing business in China to acknowledge that as significant shifts occur in the complex and interdependent U.S.-China business relationship, tactical changes will not lead to success. Companies need to adopt a wholesome new approach in their China-focused strategies.

Leading U.S. companies have to realize that a judicious mix of competition and collaboration is key to success in China. That may seem contradictory to most, but a number of companies are eagerly embracing this concept. Companies, such as Goodyear, for example, partner with local companies as its vendors while competing with them through brand power and differentiation in a booming domestic tire market.

The model Goodyear have built in China is make in China for China and buy in China for the rest of the world,” says Pierre Cohade, president of Goodyear Tire & Rubber Company’s Asia Pacific region. In other words, the tire company operates a state-of-the-art manufacturing plant in Dalian to produce high-value-added consumer and commercial tires for the Chinese market while also maintaining a sourcing center in Shanghai for the rest of the world.

As China undergoes massive urbanization while building out distributed renewable energy and smart-grid and electric vehicle infrastructures, U.S. companies have opportunities to deploy their technologies in Chinese markets more rapidly and on a larger scale than in their home markets.

Preparing for More Than One Future in China

An expanding and stable Chinese economy means greater opportunities for U.S. companies that have the flexibility not just to weather change but to prosper from it as well.

Business agility is the key to thriving amid China’s constant change and, as China evolves, companies have to adjust their business models. Know that accommodating the realities of China is not about embracing every difference.

Rather, it means finding a common platform and recognizing China’s new priorities, whether that means developing the inland, generating employment, reducing inequalities, using resources more efficiently or building up smart infrastructure.

And it means partnering with China’s private and public sectors from a position of strength. An expanding and stable Chinese economy means greater opportunities for US companies that have the flexibility not just to weather change but to prosper from it as well.

M. Isi Eromosele is the President | Chief Executive Officer | Executive Creative Director of Oseme Group - Oseme Creative | Oseme Consulting | Oseme Finance

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