Tuesday, November 03, 2015

A Different Way to Go to Market in China

When most US persons think of China, they see its vast, authoritarian central apparatus and it's one-party political system.  All roads lead there, and therefore to be successful in China, you must work directly with this apparatus.  This view is wrong in many (most?) cases.

The primary mission of the Chinese central government is stability.  Progress towards economic development, displays of military strength, even the kerfuffle in the South China Sea is boiled down to the continued stability of the system.  (The South China Sea is the primary route for CHina's growing need for energy imports, among other resources integral to their continued growth.)  With such an ardent focus on stability comes a strong disdain for risk, the lifeblood of innovation.

Stating the obvious, the Chinese market is different than most any other.  Cultural norms, economic structures, and paths to execution all make for a steep hill to climb.  Each of these elements (and more) also add risk to even the most proven ideas when brought in to this market from other regions of the world.

Rather than focusing on the central apparatus, instead look to the provincial level to support your go-to-market ambitions, ideally well outside the hubs of Beijing and Shanghai.  There you will find emerging leaders thirsty for risk, to help bolster their credentials for future roles within the national party leadership.

Given the emerging nature of the economy, the leash on what the provincial authorities can and cannot do is long, much longer than the US system.  Leeway can be found to experiment and iterate, especially when the focus is on further developing quality of life for the Chinese people.  Rules can be bent as long as the value is evident.  Time can be given to adapt.  Metrics and case studies can be developed, proving the success of the idea inside the Chinese system.  Once proven, the central apparatus can be approached for a larger rollout.

This is of course not the right path for all.  However, for many US businesses eyeing China, targeting provinces first can offer an optimal path towards accessing this vast and growing market.

Monday, October 19, 2015

American Biases

One of the core issues of working between China and the US is the cultural biases we both impose on our  personal interactions.  As with any bias, these biases are often born from experience, direct or tangential.  Sadly, when it comes to the American media, they are too often willing accomplices in reinforcing such biases, particularly when it comes to China.

In this case, when I refer to the American media, I am referring to the grand idea of great institutions of our day, that have developed a process and a skill to search for the idea of truth.  Objectivity is still the goal, if not always attained.  I know this is idealistic in this political climate, but I have seen first-hand an institution that represents this idea at its core.  Unfortunately, with this same institution, it seems the idea of objectivity is thrown out the window when it comes to China.

Take, for example, this article from today's Washington Post.  The idea that "China" is still conducting government-sanctioned cyber attacks is sexy, and it fits our perception of both an untrustworthy leadership (Xi), and an evil enemy (China).  There are two issues with such a report.  The first is that the decision to halt such attacks was made just a month ago.  To expect the government apparatus of 1.2 billion people to halt activities in such a short time is naive to the challenge of managing any large organization, let alone one such as China's.

The second issue is that the article does not attempt to define "government".  I wonder if Ms. Nakashima even asked her US sources to define the organizations they label as government sources of the attacks?  If she did, she does not report on their answer.  China is a nation of 34 provincial governments, hundreds of state-owned enterprises, among many other government operations.

The idea that the central authority dictates the micro actions of every government-tied organization throughout the land is wrong.  Americans (and the American media it seems) would be surprised to learn that the provincial authorities wield tremendous power, in some instances significantly more than even our state governments.

To assume that a cyber attack happening now is at the behest of the central authority is naive, and to not dissect these questions further as a a journalist is at best lazy, and at worst negligent.