A Few Rules for Succeeding in China

Monday, March 8, 2010 2:07
Posted in category Uncategorized

Earlier this morning, the following tweet came across from HBS Professor Rosabeth Moss Kanter:

1st rule of success in life: Show up. 2nd rule: Speak up. 3rd rule: Partner up. 4th rule: Never give up.

It was a well timed tweet as (1) I had just returned from an opening ceremony in Chengdu to launch our community center (2) I had just received my class evaluation (3) I had spent an hour and a half talking about what “success” means in Chin and (4) I had a few minutes to put together a post (I have been struggling with this for the past 2 months).

All very positively oriented goals, and I would agree with them, I would say for anyone who is in China there are a number of additional rules that would need to be included into a “how to succeed post”.

The first being.. show up with reasonable expectations.  It is not a rule that is meant to limit anyone’s dream (Starbucks does have 90+ outlets in Shanghai), but a lot of people/ organizations that I speak with when looking to enter China (or in the middle of launch) often have unrealistic expectations… or at least have yet to fully put into context the amount of investment it will take in time, money, and capacity to achieve those goals.

Second: Develop a high tolerance for pain.  Want to be innovative?  cut a new path?  Don’t expect it to be easy, and don’t give up.  Things go right and wrong everyday, and regardless of how wicked the ride may be, as long as you are meeting expectations (see #1) and the reward is worth it, then it is worth it to persevere.  Cutting corners in the face of pain is the quickest way to move the defenses of a line backwards(see #3) and that will only land you in further trouble later.

Third. Have lines (moral and economic) that cannot be moved.  Stand up for something and develop a business model that you control and remember that if your supplier is messing around now, they will mess around later – unless you take the necessary actions (not doubling down) to rectify the situation.

Fourth.  understand what the motivating factors are for the parties sitting across the table, stop negotiating, and begin collaborating.   If you are walking into a meeting preparing for a heated pissing contest why bother?  There are no deals of the century in China, no deal has to be done today, and there are options.  Take the time to understand what is driving the person today, and what it will take to keep that party moving in the right direction (right director = down the same path as you), or cut the cord and develop another line.

Fifth: Plan ahead, speak up, and move quick… when things do go wrong.  Before launching a new product, or sourcing a new product, spending the time to to fire drill the what ifs can go a long way to preparing firms and their managers for when things don’t go right.. it may only require a tweak.  It may require a nuke.  But, knowing the signs and the available remedies ahead of time is far better than finding yourself in crisis mode not sure what to do and calling on externals to fix things.

Sixth: Pay the full real costs up front. Factoring in the costs of negative externalities is a must…  Regulations and consumer expectations are only getting tighter, and firms who are caught on the wrong side of a moving regulation are going to pay more to bring themselves into compliance.  Want to use a supplier who abuses line workers, you will pay the cost.  Don’t care if your supplier dumps chemicals into the river, someone else will.  Think that hongbao is the “key” to a relationship… what happens when they go to jail?  Price in the costs of choosing suppliers, partners, and channels that follow global standards… cause local standards are only going that way, and anything local+ will require upgrading at some point… at a cost that is far more uncertain than if you build your platform on it now.

Seventh: If something does go wrong, look internally first. It is not always the pain suppliers fault, or a nationalistic regulation.  When things fail it is typically no more than the byproduct of a failed process or system.  Identify that, work with it, and move on.

Finally… shut up and get to work.   I cannot possibly begin to list off the business ideas that I have heard, how many were “in the bag”, the fund is raised, blah blah…and how few of those ideas and people are still here.

Investing in China is more than about how much money, what school one went to, or how well a product launch in a particular city went.  It is about putting heads down, soldiering through the minefield, and getting things built.  It is a process that rarely is advanced within the bars of the Bund, or through social mediums like twitter or a kaixin page.  It is about building solid foundations in product quality, market channels, branding, human resources, management depth, and a store of cash locally to advance through the stages. It is not a foundations built on consultants, an entourage of expats, or through “guanxi”.

things will not always go right in China, but they are not always predetermined to go wrong in China, but when they do one can often look at the structure, expectations of the firm, and a firms real commitment to their plans as the root cause behind success/ failure.  It is a dynamic place, painfully so sometimes, but one of the best places about being in China is watching growth in people and organizations who have taken the time to get it right.

Have a “rule” to succeeding to China?  Submit it in the comment section.

Update 1: One rule I forgot is that in building a long term platform, that will mean building something that does not rely on expats holding all key management positions.  Expats are temporary, halfpats are half way there, but if you want to be able to really judge the success of how well something is built, look to see who is actually running things.

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9 Responses to “A Few Rules for Succeeding in China”

  1. Chris says:

    March 10th, 2010 at 8:35 am

    “Investing in China is more than about how much money, what school one went to, or how well a product launch in a particular city went. It is about putting heads down, soldiering through the minefield, and getting things built. It is a process that rarely is advanced within the bars of the Bund, or through social mediums like twitter or a kaixin page. It is about building solid foundations in product quality, market channels, branding, human resources, management depth, and a store of cash locally to advance through the stages. It is not a foundations built on consultants, an entourage of expats, or through “guanxi”.”

    This is an outstanding summary of what is not required for success in the PRC market and what is genuinely required. Thanks, as it is something that had to be said. There are far too many expats with a ‘great idea’, endless complaints about China and Chinese people and zero capacity to execute. Running a business anywhere is tough. Successful business is about building great products, great teams of committed people, a service culture, localising the cost base and developing or managing sales channels and delivering those products at a price the market is willing to pay. None of this is easy, the pace of change in China extraordinarily rapid, constant innovation is required and compliance (in tax, HR, quality) quite tough. A very good post!

  2. Jesse Covner says:

    March 10th, 2010 at 8:58 pm

    I’m not one who usually creates rules… I rather look at each situation… each day … and determine the best path forward according to what’s in front of me. Anyway…

    I’m an HR-specialized management consultant, so naturally what I always see are HR problems which turn into operational problems. What I often see are companies and managers who don’t know how to lead people. So… my rule for succeeding in China:

    Always think HR. Meaning… always think about how to develop your staff, and think of how you will keep them after they have developed (and have a higher perception of their own value). Always think about systems which motivate and retain the right people, as well as the systems your organization would need to let go of people without lawsuits and labor unrest (ie. Performance, C&B).

    What types of failures do I usually see? Employees leave because the C&B system was not set up properly. Employees who don’t develop, and therefore have no desire to grow with a company. Managers…often expat managers… who don’t care about their employees nor understand them. Employee dismissals leading to lawsuits (and much much worse) because the company management didn’t adopt basic, common-sense performance appraisal systems. Quality problems and lack-of innovation, because management does not know how to make people care about their work. Managers who hire relatives, who take bribes, who refuse to get involved. All these problems are can be managed. But it requires a company’s top-leaders to think in terms of “people issues” instead of “operational issues”.

  3. Daniel says:

    March 10th, 2010 at 9:08 pm

    Could you please explain rules 2. speak up and rule 3. partner up, from the first quote? What does that mean exactly?

    Great post. Thank you.

  4. Rich says:

    March 10th, 2010 at 10:45 pm

    Jesse – great comment. thanks

    Daniel – I only saw it on twitter… that was all I got from the original author, but what I take it to mean is that you need to make yourself known (speak up) and partner up (don’t try to do everything yourself) …

  5. Chris says:

    March 11th, 2010 at 11:41 pm

    I agree with Jesse’s point that people are key and great HR necessary to build a great China business. Nonetheless, there’s much more to it…

  6. How To Succeed In China Business. THE Rules. | Manufacturer China says:

    March 13th, 2010 at 11:38 pm

    […] Brubaker of All Roads Lead To China is out with an über-helpful post, entitled, A Few Rules for Succeeding in China, setting out the following eight rules to follow to succeed in […]

  7. Jason says:

    March 16th, 2010 at 6:07 pm

    #4 is absolutely spot-on. I can’t believe the number of people who think that they can bulldoze issues or other parties. If you watch Chinese negotiators, they often end up getting what they want, but it’s not by pushing through obstacles – instead, they work around problems to find solutions.

    Great article!

  8. A Few Rules On Succeeding In China : : Imports Oriental Blog says:

    April 11th, 2010 at 10:55 pm

    […] A Few Rules On Succeeding In China […]

  9. Colton says:

    August 4th, 2010 at 2:49 am

    “Shut up and get to work!” Haha. Fighting procrastination is key! I have seen so many people with big plans in big places (like China!) that never made or (or at least they haven’t made it yet) because of such procrastination.

    My rule that applies to ANYTHING, not only succeeding in China…

    Do NOT procrastinate.

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