Making China Easy

Sunday, February 1, 2009 10:46

Whenever I see a press release about the newest promising market, like Chinese Companies Want to ‘Buy American’, and a firm that will make things easy… my interested is peaked.

The most recent one comes from Dextrys:

a US-based Chinese outsourcer providing Product Engineering and Application Services globally. With more than 1400 employees across California, Boston, New York, Atlanta, Shanghai, Beijing, and Suzhou, China

and their recent survey of Chinese firms:

A recent survey of nearly 800 Chinese businesses found that an enormous opportunity currently exists for US business software in China. 87% of the companies surveyed purchased software within the previous 12 months and 79% of those indicated they would buy software from any global location as long as it met their business needs. Notably, more than 50% indicated a desire to see more American software products on the China market.

Initially, all looking good to me, except for a few items:

The challenge for US software companies is not creating a market in China, but rather positioning US software products and marketing efforts to reach Chinese buyers effectively. Understanding cultural characteristics and differences in how Chinese businesses find and select products is essential. Traditional US marketing methods like direct mail and magazine advertisements have low impact:

Fortunately for vendors though, there is Dextrys to help them find their market.

Not trying to take anything away from their services, or their research, I must tell you that this is a pitch I have seen before and I would warn anyone from swallowing whole. China is no doubt a country that will hold opportunities for many, but there are no shortcuts.. and no guarantees… and there are certainly no markets that have been untapped because of something hidden.

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2 Responses to “Making China Easy”

  1. Dan says:

    February 1st, 2009 at 3:08 pm

    I agree in general and on this one. One should not swallow these things “hole” or “whole,” and the biggest disconnect I see on these things is price. Yes, 50% want to see more American products on the Chinese market, but I’m betting less than 10% of that 50% are actually willing to pay anything even close to American prices for that software. I cannot tell you how many times my own clients have told me of their studies showing a huge demand for their products, or that the Chinese government has shown a huge interest in their products, only to have the whole thing fall apart when the putative Chinese buyers are unwilling to pay even half of what the American company needs to sell its product (or service) for to break even. And this ignores countless other issues that can complicate things.

    In other words, it ain’t never easy. Sorry.

  2. Tim says:

    February 2nd, 2009 at 11:44 pm

    Actually, for enterprise related software sales, reputation of the product is key in the market; new entrants find it difficult selling in China if there is little to no brand recognition for their product within their target audience. I’d agree that there is demand for the efficiencies that enterprise software can bring to a local company but those stats being quoted would need to be qualified for me before I buy into them.

    Dan is right on pricing expectations for local buyers – software and services are only gradually being accepted here. That being said, one of our most successful clients does lean management consulting and the value they bring easily outweighs the costs. Local businesses buy on value as well, it just a matter of proving the value.

    Regardless, I suspect big ticket items that don’t show early results (i.e. cost savings) will be a hard sell especially since much of the enterprise software being sold is considered a fixed asset and VAT recovery is difficult – just adding to the cost.