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.

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