Everything about China and it's culture

Everything about China and it's culture


Venturing into China? Now or Never!

So you want to venture into the Chinese market? The first step, and most crucial, is coming up with your "China Strategy".

A common feeling amongst businesses that have already taken the plunge is the Chinese "probably improve more rapidly than anyone else".

This is very important in today’s business market where if you stand still you’re dead. Tom Debne from Megara states "The Chinese can do everything we do if they want to and far cheaper than we do it. It is just that they don’t have the quality-control systems or the understanding and that is a cultural thing that will change with time"

A lot of companies take the saying "if you can’t beat them join them" literally to heart when it comes to venturing overseas. But it is important to note that once that first big step is made the options open to you can be very complex. Expect unexpected results both good and bad.


Take for example the Japanese biotech company GNI, it has vast economic links with china and in the space of a couple of years is now the biggest trade relationship in the world.

Chris Savoie, chairman of GNI, says that there China adventure began as a research venture with Shanghai Genomics. The venture was nothing more than a low-cost outsourcing exercise where the initial benefits were around cost savings in the "conducting of pre-clinical research", savings as much as half the current costs.

Chris goes on to say that the initial venture exceeded all there wildest dreams, and that the benefits went far beyond the initial estimates and analysis. He was so impressed that the following year he wanted to spend two thirds of there yearly budget in China. Unfortunately his desire to increase spending in china was met with some internal opposition.

Eventually his eagerness won over and the original Chinese company was acquired. Chris had stumbled onto a niche market where bioteches were in desperate demand for capital and hence very willing acquisition targets.

GUI are now a global company with headquarters in Japan. In china there growth continued where there strategy was to integrate vertically by adding manufacturing and sales arms. They also didn’t try to invent the wheel by looking for possible mergers and acquisitions for its manufacturing arm.

GUI’s strategy can be summed up as "think regionally and act globally".

Another great Chinese success story comes from a company called Optima Health Solutions International. Rashid Ahmed is the current president of this German company. The major in manufacturing of Spinal Injury equipment.

They started there love with china by risking a venture into Taiwan. It was a move that yielded more bad results than fruitful ones. It was a necessary risk to "understand the people" and to understand "what it meant to do business there".

Choosing the access point into china is critical to success, there next choice was Beijing. The process was much more involved but the move was exponentially more fruitful. Once you get your foot into china it is the perfect launch pad into the rest of Asia.

They are currently looking at venturing into India from china, due to the very similar conditions.
Optimas strategy can be summed up as "thing globally, strategize regionally and act locally". They expect over 40% of revenue will come from China. One key point that Rashid makes is that the Chinese are not interested in dealing with just one country, they are looking for international companies.

One of the greatest fears with dealing with china is the whole intellectual property debate. They just don’t have the legal enforcement capabilities as other countries. A lot of companies today see this as a hurdle and not a road block. Some companies create subsidiaries across the 2 continents where they source IP from china into there more legally controlled country headquarters example being Australian company Avexa. Laboratory personal and facilities are "extraordinarily cheap" in china and skilled people are available that cannot be found in Australia.

China innovations will soon take the world by storm, there rate of patent applications are now the largest in the world. They can do "innovation" at will, they have the flexibility to change business models and skills at will.

As a company owner be aware that what lead you may have now in your chosen area, can and probably will be eroded faster than what you planned for. A 5 year lead can in some cases be eaten up in the space of one. The only solution is continued, and highly disciplined, innovation.
Optimas strategy can be summed up as "thing globally, strategize regionally and act locally". They expect over 40% of revenue will come from China. One key point that Rashid makes is that the Chinese are not interested in dealing with just one country, they are looking for international companies.

One of the greatest fears with dealing with china is the whole intellectual property debate. They just don’t have the legal enforcement capabilities as other countries. A lot of companies today see this as a hurdle and not a road block. Some companies create subsidiaries across the 2 continents where they source IP from china into there more legally controlled country headquarters example being Australian company Avexa. Laboratory personal and facilities are "extraordinarily cheap" in china and skilled people are available that cannot be found in Australia.

China innovations will soon take the world by storm, there rate of patent applications are now the largest in the world. They can do "innovation" at will, they have the flexibility to change business models and skills at will.

As a company owner be aware that what lead you may have now in your chosen area, can and probably will be eroded faster than what you planned for. A 5 year lead can in some cases be eaten up in the space of one. The only solution is continued, and highly disciplined, innovation.




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