Ni hao lao ban,
CHINA is the Front and Centre topic for New Zealand’s international business, economic and political engagement. In recent weeks, our leaders, citizens and media have again grappled with the enormity of China’s influence upon us.
- The Chinese Prime Minister takes a bet with John Key that bilateral trade will soon double from the current $10 billion.
- China is deliberately damping its forecast GDP growth to 11%, at which rate its hunger for resources will still double every six years.
- At this rate, too, by about 2020 China’s GDP may match USA’s.
- China’s purchasing fuels the economies of many quasi-client states, such as Australia, and thus us.
- In several resource-rich countries, Chinese asset acquisition follows its purchasing of goods.
- Here, a Chinese company bidding for dairy farms points up a latent Sinophobia and allegations of our government lacking a coherent policy in respect both of “strategic” resources and of China.
- China is prioritizing Food Safety and is welcoming New Zealand’s contribution to its standards establishment.
- North Asia is geopolitically calm, but North Korea is newly restive.
How do we, as a country and as business owners, address the China challenge? Should our strategy be defensive and fearful, or welcoming of opportunity? And what must our strategic time horizons be?
To the main question, the lead from Government is clear. Through focused diplomacy, we were first with a Free Trade Agreement, and enjoy remarkable access to and in-country visits from the Chinese leadership. Through MFAT and NZTE, and through more business-friendly policy settings, our government is helpful in nurturing our China trade. E.g. http://www.nzte.govt.nz/explore-export-markets/North-Asia/Doing-business-inChina/Pages/China-export-intelligence.aspx
So, whether your strategy is or may be export, outsourcing, onshore manufacturing, technology transfer, services provision or just best-price purchasing, the Chinese “elephant in the room” begs to be addressed.
Time horizons are equally relevant in your strategic context. Ever since Confucius and the early Middle Kingdom dynasties, China has played a long game. In politics and business, Chinese culture is still Confucian, non-Western. Its management characteristics emphasize strong hierarchies and cohesiveness, group before self, orientation towards seniority and good conduct, human relationships, personal connections (guanxi), risk aversion, trust and patience. Confucius said, “Do not intend to be too quick. And do not fix eyes on small benefits. Intending to be quicker, you won’t get where you want. Fixing your eyes on small benefits, you won’t be able to handle a big task.”
To engage successfully in China, your strategy should comprise a slow, thorough and patient build of a solid foundation. Most Western failures in China have impatience as their common feature.
One famous failure was the misbranding of Coca Cola. The company launched with “ke-kou-ke-la”, which unfortunately translated as “bite the wax tadpole”. From an expensive retreat and rebrand emerged “ko-kou-ko-le”, which approximates as “happiness in the mouth” . Much better!
All activities in your buildup will give you cause for impatience. Developing trustworthy people connections, marketing decisions, gaining financial and legal compliance, managing risk, and especially in seeking some payback – all move with frustrating slowness. And your upfront investment is heavy. The task is more costly and more time-consuming than any other market entry. Further, the Golden Goal, when the Chinese middle class matures to resemble Western demographics and consumption behaviours, is perhaps 20–40 years away. Chinese Generation Y is the highest earning age group, was born 1980-1990, numbers 240 million and is well educated and aspirational. So the prize is huge for the heirs of today’s farsighted Big Taskers.
Next month, I will discuss some of the practical NZTE marketing tips plus some observations from my own China experiences.
Zaijian,