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

Copyright Control © 2011 Oseme Group

Doing Business In A Rising China

By M. Isi Eromosele

As the fastest-growing major economy in the world, China continues to offer global companies attractive investment and business opportunities. However, doing business in China also means navigating the complexities that arise from China’s unique historical, political, and cultural contexts.

Despite these challenges, U.S. companies can succeed in China by developing collaborative relationships with Chinese stakeholders and demonstrating the flexibility to continuously adapt their strategies to the country’s dynamic environment.

These companies can position themselves for long-term success by embracing the Chinese proverb “qiu tong cun yi”, which means “seeking similarities while respecting differences.” In doing so, they can incorporate China’s long-term interest in stability and prosperity into their business strategies to create win-win results.

Despite the global recession, China has remained a bright spot for many Western multinational companies. The size of the business prize justifies much optimism. Since the economic reforms started in 1978, China has enjoyed an average annual growth rate of 10 percent. During the recent global recession, China overtook the US as the world’s largest auto market and energy consumer.

In 2011, China surpassed Japan to become the second-largest economy in the world, after the US. In 1980, China was not among the top 10 global economies by size. By around 2025, Oseme Consulting forecasts that China’s economy will be larger than the U.S’ and will grow to approximately 125 percent the size of the US economy by 2050.

Western companies, who continue to believe strongly on the efficacy of doing business in China, are confronting these new challenges. To fully benefit from China’s economic expansion requires more patience and tenacity than previously anticipated.

The Challenges Of Doing Business in China

While China is moving toward aligning its processes with those in developed countries, global companies are still struggling with the nation’s sometimes conflicting political and economic policies. In many ways, these are among the risks and challenges associated with doing business in developing countries.

Many multinationals fear that a more globally confident China is increasingly employing instruments of state capitalism to promote economic nationalism at their expense. Some have decried new rules of doing business in China as “an unprecedented use of domestic intellectual property as a market-access condition because it makes it nearly impossible for the products of American companies to qualify unless they are prepared to establish Chinese brands and transfer their research and development of new products to China.

However, China also seems to know and realizes that it cannot go it alone. The Chinese government is now committed to giving equal treatment to foreign and Chinese firms in its procurement decisions as well as to working with the international community on protecting intellectual property rights.

So how can leading companies managing these contradictions and the resulting unpredictability? While it is hard to say how China is going to evolve politically or socially, the country is making tremendous progress towards becoming a globally influential economic juggernaut. Both the Chinese government and the Chinese consumer want more; that is, more access to the global marketplace and more prosperity from the global economy.

Appreciating the differences

Taking a good look at China’s past and its history reveals why many Chinese believe their own institutions and processes are best suited to helping China reclaim its place as a leading global economy.

Many of the challenges of doing business in China arise from the country’s distinctive history and culture, its geographic diversity, and the role of the government in setting economic policies. Comprising more than 20 provinces, dozens of ethnic groups, and hundreds of dialects, China presents a diversity that is in equal parts arcane and exciting. Making sense of it all is not easy in an environment characterized by rapid and dramatic economic and social shifts.

In today’s China, growth is still important, but addressing inequalities has acquired a new urgency; industrialization and urbanization are continuing at swift speed, but environmental competence has acquired new meaning; exports are still critical to growth, but boosting domestic demand is now a priority.

To succeed in this environment, it is important to recognize that local practices and customs are very entrenched in China. History and ancestors exert strong influences on modern China. Today, with the return of considerable economic clout after a long period of decline, China seems eager to demonstrate its ability to address its structural problems and developmental challenges on its own terms.

In all of these shifts, US companies can still find new opportunities to grow revenues, increase profitability and realize further efficiencies in doing business in China.

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

Copyright Control © 2011 Oseme Group

Global Market Segmentation

By M. Isi Eromosele

Market segmentation aims to increase the scope of business through the close alignment of products or brands with identified customer groups. The criteria for implementing segmentation vary depending on the character of the market.

In consumer oriented marketing, a company may use demographic and socio-economic variables, personality and lifestyle variables or situational attributes (intensity, brand loyalty and attitudes) as the foundation for segmentation.

In industrial marketing, effective segmentation is achieved through the formation of end use segments, product segments, geographic segments, common buying factor segments and customer size segments.

A market can also be segmented by level of customer service, stage of production, price/performance characteristics, location of manufacturing plants, channels of distributions and financial policies.

The key is to choose variables that divide the market in a way that aspects of your strategy are aligned with how customers in segments are expected to respond to your product or service. A variable should represent an objective value, such as income, rate of consumption or frequency of purchases, not simply a qualitative viewpoint, such as the level of customer satisfaction.

A variable should create segments that would be accessible through marketing and promotions. Additionally, segments should be substantial in size, large enough to necessitate a distinct marketing effort.

The strategic choice of market segments requires careful evaluation of your company’s business strengths as compared with the competition. It also requires in-depth marketing analysis to uncover market segments where your company’s competitive strengths would be most effective.

A market should not be segmented based on such obvious categories such as religion, age, profession or family income or in the industrial sector, the size of the company. Market segmentation is a task that can be accomplished through the implementation of creative strategy.

An additional creative way of discerning market segments is by applying the concept of micro-marketing + customer relationship management. A segment is trimmed down to smaller segments and even to an individual. Micro-marketing combines two independent self-sufficient concepts: information retrieval and service delivery.

On one side is a proprietary database of information about customer preferences and purchase behaviors; on the other side is a disciplined, tightly focused approach to service delivery that uses the database information to customize services packages for individual customers or groups of customers.

An important strategic consideration in determining global marketing strategy is the definition and segmentation of the target market. The underlying factor in the formation of market segments is customer needs.

Once a market emerges, its worth should be determined by examining its profit potential. Once its potential is positively ascertained, its boundaries must be identified on the basis of product/market scope.

Market boundaries are defined by grouping a set of market cells together, each defined in terms of the above dimensions. While it is conceivable to serve an entire market, served markets are usually smaller in size and scope than the total market.

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

Copyright Control © 2011 Oseme Group

Market Entry Strategy Development

By M. Isi Eromosele

A market entry strategy that is sound gives your company a greater control of its introduction into its target market, creating launch efficiency that would deliver a framework for subsequent planning of calculated launch activities.

The key is to create a well supported and objective plan that utilizes maximum value of internal assets and investments and eventually improved competitiveness and secured revenue. The use of this approach would:

• reduce financial uncertainty that usually results from absence of complete market analysis and a structured strategic plan
• enable adequate financial planning and collaboration of business plan
• engender formulation of business case assumptions that better correspond with market conditions and the market position chosen
• create launch efficiency through a framework toward following planning of tactical launch actions
• facilitate risk management and market insight and contingency planning

New market entrants face huge pressures on market entry that is usually created by internal and external expectations. A number of these pressures can be alleviated through the development of a clear market entry strategy and effectual purposeful plans.

Internal Constraints and Expectations

It is vital that the market entry strategic plan be implemented on a tightly executed timely basis to forestall increase in market share cost and delivery of predicted financial forecasts

In order to prevent a large resource gap, launch teams should be rapidly assembled and expert expansion carried out expeditiously

It is imperative that financial objectives and growth expectations be set up before launch. As such, any unplanned market activities and launch delays will interrupt initial customer response and revenue predictions.

External Constraints and Expectations

In most cases, organizations do not have in-depth knowledge of the market they are about to enter. Neither do they have a good insight into the market drivers.

Competitors could plan preventative and disruptive actions to enhance their own market positions and secure their customer base before your company’s entry.

A structured method for developing a market entry strategy requires a comprehensive analysis of the target market. A comprehensive market analysis, using market data and customized market research allows you to assess all areas affecting your chosen strategic course, including:

Market Dynamics

Thorough market and consumer segments and full analysis of market drivers that will positively identify the most valuable targeted segments, resulting in market growth.

Distinctive segments are assessed to provide information on key market components such as retail structures, financial systems, available technologies and distribution channels.

Competitive Landscape

A wide-ranging competitive profile is carried out of such areas such as market positioning, branding, value proposition, market offerings, pricing, customer care, sales and support systems in order to properly gauge competitors’ strengths and weaknesses.

Macro-Economic Viewpoint

Precise analysis of pertinent macro-economic information is carried out to determine future market and individual segments growth.

Regulatory Framework

A complete analysis of the regulatory environment is implemented to find out how this may affect market and segment growth.

After all the necessary and detailed information has been collected, they should be merged into a complete market entry strategy as well as comprehensive tactical launch plans, allowing you to formulate a clear and differentiated market position with aligned market offering, pricing, communication, customer service as well as sales and distribution. This enables a total stakeholder buy-in and efficient implementation of the launch plan.

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

Copyright Control © 2011 Oseme Group

Singapore – Economic Growth and Development Part I

By M. Isi Eromosele

Singapore is a highly developed and successful free market economy in which the state plays a minimal role. It has an open business environment, relatively corruption-free and transparent, stable prices and one of the highest per capita gross domestic products (GDP).

Singapore is one of the Asia-Pacific region’s most open economies, serving as a major financial center and as an important production and research hub for pharmaceuticals and electronics.

Singapore’s dependence on overseas demand meant its economy was particularly affected by the global financial crisis with the economy contracting 1.3 percent in 2009 but it also means it is now very well positioned for a rebound.

The main driver is the manufacturing sector, which expanded 46 percent in 2010, thanks to gains in biomedical production, as well as strong growth in the electronics cluster, which benefited from healthy worldwide demand. The services sector benefited from tourism inflows after the opening of two casino resorts last year.

Singapore’s strategic location on major sea lanes and its industrious population have given the country an economic importance in Southeast Asia disproportionate to its small size.

Upon independence in 1965, the Singapore Government adopted a pro-business, pro-foreign investment, export-oriented economic policy framework, combined with state-directed investments in strategic government-owned corporations. Singapore’s economic strategy proved a success, producing real growth that averaged 7.9% from 1965 to 2009.

The global financial crisis of 2008 and 2009 had a sharp impact on Singapore’s open, trade-oriented economy. Singapore saw its worst two quarters of contraction in late 2008 and early 2009, but quickly recovered with strong performance in later quarters. The official growth figures for 2010 are between 13% and 15%.

Singapore’s largely corruption-free government, skilled work force, and advanced and efficient infrastructure have attracted investments from more than 7,000 multinational corporations from the United States, Japan, and Europe.

Also present are 1,500 companies from China and another 1,500 from India. Foreign firms are found in almost all sectors of the economy. Multinational corporations account for more than two-thirds of manufacturing output and direct export sales, although certain services sectors remain dominated by government-linked companies.

Manufacturing (including construction) and services are the twin engines of the Singapore economy and accounted for 26.3% and 69.1%, respectively, of Singapore’s gross domestic product in 2009 and 2010. The electronics and biomedical manufacturing industries lead Singapore’s manufacturing sector, accounting for 30.6% and 20.8%, respectively, of Singapore’s manufacturing output in 2009 and 2010.

To inject new life to the tourism sector, the government in April 2005 approved the development of two casinos that resulted in investments of more than U.S. $5 billion. Las Vegas Sands’ Marina Bay Sands Resort opened for business in April 2010, while Genting International’s Resort World Sentosa opened its doors in February 2010.

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

http://twitter.com/osemegroup | http://twitter.com/oseme22

Copyright Control © 2011 Oseme Group

Singapore - Economic Growth and Development Part II

By M. Isi Eromosele

To maintain its competitive position despite rising wages, the government of Singapore seeks to promote higher value-added activities in the manufacturing and services sectors. It also has opened, or is in the process of opening the financial services, telecommunications, and power generation and retailing sectors to foreign service-providers and greater competition. The government has also implemented cost-cutting measures, including tax cuts and wage and rent reductions, to lower the cost of doing business in Singapore.

Singapore’s principal exports are petroleum products, food and beverages, chemicals, pharmaceuticals, electronic components, telecommunication apparatus, and transport equipment. Singapore’s main imports are aircraft, crude oil and petroleum products, electronic components, consumer electronics, industrial machinery and equipment, motor vehicles, chemicals, food and beverages, electricity generators, and iron and steel.

Singapore continues to attract investment funds on a large scale despite its relatively high-cost business operating environment. The United States leads in foreign investment, accounting for 11.2% of new actual investment. As of 2009, the stock of investment by U.S. companies in the manufacturing and services sectors in Singapore reached about $76.86 billion (total assets). The bulk of U.S. investment is in electronics manufacturing, oil refining and storage, and the chemical industry. About 1,500 U.S. firms operate in Singapore.

Situated at the crossroads of international shipping and air routes, Singapore is a center for transportation and communication in Southeast Asia. Singapore’s Changi International Airport is a regional aviation hub served by 80 airlines. The Port of Singapore is the world’s busiest for containerized transshipment traffic. The country also is linked by road and rail to Malaysia and Thailand.

Telecommunications and Internet facilities are state-of-the-art, providing high-quality communications with the rest of the world. Singapore has rolled out a nationwide broadband network that provides high-speed Internet connections at low prices. Sixty percent of the country is covered by this broadband service. Radio and television stations are all ultimately government-owned or government-linked. Daily newspapers are published in English, Chinese, Malay, and Tamil.

Singapore’s strengthening economy has added to an Asian rebound that prompted central banks to raise interest rates in recent weeks, even amid concern that Europe’s debt crisis will slow the global recovery. The nation has raised its GDP forecast twice this year and Credit Suisse Group AG and Oversea-Chinese Banking Corp. predict the island may overtake China as Asia’s fastest-growing economy in 2011.

Singapore is on course to be the world’s second-fastest growing economy, adding to inflation pressures that have prompted policy makers to allow faster currency gains and take steps to cool the property market. The expansion may signal Asia will in 2011 sustain an outperformance over developed markets hampered by Europe’s sovereign credit woes and high unemployment in the United States.

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

http://twitter.com/osemegroup | http://twitter.com/oseme22

Copyright Control © 2011 Oseme Group