In his lecture, Danny discussed the opportunities and challenges of doing business in China and shared his expert advice for U.S.-based companies and executives who wish to achieve success in this rapidly-growing global market.
In terms of opportunities, China is experiencing unprecedented GDP growth and is expected to surpass U.S. GDP in the next 5-10 years. The country is closing the gap between urban and rural areas, experiencing a growing middle class and witnessing rapid growth in tier 1 and tier 2 cities. Over 250 cities have at least a million people. Data shows that a majority of Fortune 500 companies are coming from China.
In terms of challenges, some of China’s traditional industries like manufacturing are slowing down while service and high-tech industries driven by consumption and innovation are picking up. E-commerce is radically changing Chinese consumer habits. By 2017, China will be by far the most “online nation” in the world. Demographic shifts and pollution are also ongoing challenges.
For companies entering China, Danny recommends making a long-term commitment, thinking global and going local, and being flexible and agile. Five actions to consider:
- Market Study: China has a plurality of markets with different maturity and demographics. Aligning the strategy, product and market is key to getting a good foot hold.
- Do the Math: Careful analysis of the business case. Be prepared for unanticipated turns and challenges. Create a sufficient buffer. The market will not always be growing at double digits.
- Government and Stakeholders: Understand who has an interest and what their interest is in your business. Identify their challenges and opportunities to understand their wins.
- Indoctrinate Local Management: Coach and mentor local staff into future leaders. Embrace and impress upon them the corporate culture and global opportunities.
- Innovate and Disrupt: Be prepared to pivot the business model and adapt to changing dynamics of China’s market. Size matters and gravity is a universal law.
For executives entering China, Danny advises embracing the culture, acting with integrity and flexibility, and working hard and smart. Five actions to consider:
- Read Up: China’s history is full of anecdotes and archetypes that represent the people you will work with. These stories do repeat themselves. Knowing their history breaks down a lot of cultural barriers.
- Travel across China: Learn the country by visiting as many diverse cities as possible. Do this during work as well as with your vacation time.
- Listen before you Preach: Always ask to understand before casting judgment or comparisons. The Chinese are not impressed with international ideas anymore.
- Don’t Slack Off: Quality is not enough to overcome quantity. Value is not enough to overcome volume. We have to work harder and smarter. We have to invest time to learn, share and execute.
- Build an Expat Network: Fellow expats are one of the most effective support networks in China. We understand each other and have a common need for the familiar.
Click here to access the full webcast of Danny’s presentation.