universal consensus - china - what really matters

7/31/2019 Universal Consensus - China - What Really Matters

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Business in China What will really matter

Andreas Fried & Aditya Chinnareddy

[email protected]

[email protected]

+1 760.696.0151


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Agenda


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Who We Are


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Who We AreMulticultural professionals optimizing cross-border business

Covering4.3 billion People

$56.8 trillion GDP


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Who We Do It ForBMIA Application:

Be the Worlds local business in yourindustry


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Overview of China


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1,4 billion people (U.S. 313 mn.) GDP $11.3 tn. (U.S. $15 tn.)

GDP/capita $8,300 (U.S. $48,000)


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The Opportunity


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Growth Has Been Staggeringly Fast


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Chinas Five Year Plan: 2011-2015


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POSTI

TIVE

OPENNESS OF MARKET

Environm.

protectionHigh-end

equip.

manufact.

Biotech

IT-

hardware

Renewable

energy

Consumer

electronics

Medical

devices

Tourism

Insurance

Logistics

IT-

software &

services

Pharma

Culture &

entertain

mentFood &

GroceriesRetail

N

EGATIVE

Real-estate

Coal &

steel

Chemicals

Low-end

equipmentBanking

Telecom

Railways

Red marked included in current 5-year plan


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Overview What are thecritical trends


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Aging Population

Workforce peak in next 10 years Labor replacement problem


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Filial Piety

The 1+6 rule: One child policy worker willhave to support 6 (2 parents and 4grandparents)

Extreme pressure on one-child tosucceed to support family

Highly competitive society


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Savings

China net foreign assets of $2 trillion; U.S. has net

debts of $2.5 trillion


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Disposable income

12.3% annual increase in disposable income Average spending up 75%


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Consumer spending

Shift from export to domestic consumption Stronger currency makes imported goods

affordable


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Increasing Costs

10% increase in yearly wages Will reach U.S. cost level in 2015


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Increasing Costs

Highest labor cost in emerging Asia


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U.S. vs. China


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Barriers


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UnderstandingConsumer Behavior

Little Emperors

Face Consumption

Peer Pressure:

78 % decide in store what to buy. 37 % is easily susceptible to promotions,

22 % sticks to original idea


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The Intermediary

Importance of the intermediary (Zhong Jian Ren)

Wariness of Foreigners


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Chinese Communist Party(CCP)

CCP deeply involved in government and largeenterprises

Loyalty & Status

Information Decision-maker

Power is centralized at national level butdecentralized at local level

State only owns large companies


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Hierarchy

Cardinal Relationships Ruler and Ruled

Husband and Wife

Parents and Children Older and Younger Brothers

Modern day sixth: Employer and Employee

Importance of Guan Xi

Give as much as you take

Hierarchy & CardinalRelationships


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Endurance &Holistic Thinking


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Crucial Success Factors


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Ethno-Centric vs. Objective-Centric

Ethno-Centric


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No Knowledge

Were Better

Customs &

Protocol

Recognition

of Impact

Objective-

Centric

Leveraging

Knowledge

What are the Stages ofDeveloping Global Mindset


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Four Areas of Impact

China in

GlobalStrategy

Production

Innovation

Emerging

Competition

Mega-

market


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Case Studies


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I have never worked in such a price-sensitive market.- Best Buy China President David Sisson


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China is not DIY but DIFM (Do It For Me):

Homeowners hire designers for all their homeimprovementeven where to put a vase


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U i l C F t Cli t


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Universal Consensus Fortune 100 Client

Establish

Rapport

CHINESE

Zhong Jian Ren (The Intermediary)Shehui Dengji (Social Status)Zhengti Guannian (Holistic Thinking)

Jiejian (Thrift)Mian Zi (Face or Social Capital)Chiku Nailao (Endurance)Guan Xi (Relationship is paramount)

WESTERN

Networking Meetings & E-blastsThe younger, the betterLinear thinking

Quality winsConfrontation when necessaryMinor deviations for negotiating roomTime is of the essence

Maximize

LeadGeneration

Maintain

The Client

32% Increased

Sales


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Conclusions


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Just Remember: Open Minds Open Doors

What Could Have Happened


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Global vision stems from HQ withoutregard to regional role-out

Global policies exist, but local marketsare not consulted and often go rogue

Systems, processes and roles notintegrated; limited understanding ofthem across cultures

Global reporting structure isinconsistent or underdeveloped

Global communication protocol may

not exist

Need forchange oroptimizationis recognizedand sought

Changemanagementassistance isobtained

Evaluationmade

Glocalizationvision isestablished

Action Planis set in

motion

Global Vision & Valuestake into considerationcultural fluency

Global Policies; LocalAdaptation

Global Integrated Systemsor Education/Exposure

Global reporting structureby function

Global Communication

Protocol

What Could Have Happened Glocalization Lens

W H H l


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Core Competence,

Increased Agility &Reduced Costs and

Risk

Were Here to Help The World Might be Separated by International Borders,

but your Business Doesnt Have to Be


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Strategic Alliance PartnersPreeminent firms supporting international business


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linkedin.com/in/andreasfriedlinkedin.com/in/adityareddyc

Thank You!

universal consensus - china - what really matters

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