China Costs and Productivity Up, BUT

The AFP article I saw this morning at Yahoo! says both productivity and costs are up.    Surely, both are true, but I want to pause and comment on how they mention that Adidas left China for some cheaper place. Making shoes is low end. They might do better in a poorer country.  However those moves are usually more than just cost.  See the article here if you like.

I am shocked at how even large companies at times are failing in China. I am not surprised at all that some of them throw their hands in the air and leave.   However,  for some of them, I wonder why they stay. They are wrong and will not change paths so may as well go. Many companies succeed here simply because they got lucky and bumped into the right person who then helped them. They also avoided having lawyers and accountants form their culture.

Companies with good systems and decent cultures in the West are failing to see that using the same methods used in other countries to get people on line will not work in China. Chinese people can be moved, but they are famous for being invaded and changing the invaders while not being changed by the invaders.

Let me outline the path from zero in China and you can all think how you can get on this path if you are not.

  1. Find a trusted guide to get you in who is culture, teachability,  and trust oriented.*
  2. Use that person to find you two things in China.    1.  a person or persons of your own who will be transparent and teachable  2. an organization that you can cooperate with in China that has the same characteristics.**
  3. Develop your connections from these three  groups.   Be fierce on getting future managers or partners who will be teachable and worthy of trust.  Early or late, this step must be done.  Many companies never get this done and leave shaking their heads.
  4. Start work on getting IP, customers, suppliers, researchers, sales people, customer service people and the like.
  5. Lead them excellently. Train them at world class levels on gaining buy in. Coach doing the same.

* You also need to know how to make the first step with people legally. China has its own legal framework.

** Needs for being in China vary, but whether you directly invest, get a supplier, distributor or what not the process has the same start.

There is no need to fear or fail in China because of China. It actually is a great place to work if you just know who to trust and trust them.


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Posted in: China, Culture Development, Market Entry

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