10 Reasons Why Companies Fail. Localized

Thursday, July 29, 2010 16:26
Posted in category The Big Picture

Over the last month or so, I have spoken to a half dozen or so people leading firms (large and small) who have hit the proverbial wall. Wits are at an end, the bottom line isn’t looking good, and a process of deciding what the “next step” should be in underway.

Some, particularly those in the relevant regional chambers of commerce, would say that China is getting too difficult to work with while others would say that the business plans were flawed to begin with… and while reading the the mass email from Newman Communications entitled Top 10 Reasons Why Changes Fail and how to move BEYOND THE WALL OF RESISTANCE, I found that their top 10 could be localized into a China context (in italics).

10. Some leaders don’t know how to lead change. In China, some leaders don’t know how to lead across borders, industries, cultures, and time zones.

9. Leaders assume that change is easy. Leaders assume China is one BIG market, and while it may be easy, there are far too many who feel it is.. that through a single connection, finding a “hidden” source, or be the “first” one there, that there is a first mover advantage into virgin territory

8. The leaders believe that a good idea will win every time and that employees and other stakeholders will be so struck by their leader’s brilliance that they will support whatever goofy idea they come up with. I could not have said it better

7. A good leader can force people to change. In China, there are all kinds of strategies for fomenting change, and few who understand that they are the ones who will be forced to change

6. How before Why. How big and how fast before how..

5. They ignore the context. Right on – See my previous post on that

4. Leaders don’t understand resistance so either they ignore it, or they present mind-numbing PowerPoint shows. No different in China. Books are sold on how innocent western firms are conned into painting their dolls with lead paint, and executives who normally would be 86ed manage know that selling the new hook really isn’t all that difficult back home because the China dream is still overpowering the common sense of many executives at HQ

3. Leaders go into the game without game. In China, lacking a game isn’t a death nail, but acting like you got game when you don’t can be

2. The organization is immune to change. Companies that don’t remain on top of things in China fail.

1. Leaders believe that none of the other items on this last really matter. When blinded by how far China has come, sometimes it is difficult to see the real “China” for what it is… and at that point, even common logic will confuse

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5 Responses to “10 Reasons Why Companies Fail. Localized”

  1. Chris Devonshire-Ellis says:

    July 29th, 2010 at 9:40 pm

    Any business that is tied to a single economy is always going to be affected by the machinations of that sole economy. Too many China businesses have not expanded beyond a China focus. I recall years ago the German economy was in trouble (reunification hangover) the German consultants at the time in China had a terrible time of it. Now much of the West is in the doldrums and people are saying its China that is difficult. Its not – they’re simply exposed to one sole market and are feeling the pinch.

    A rather more sensible strategy to develop is to ‘hedge’ against China by setting up overseas. After all, if you can survive in China you can survive, New York style, anywhere. We recognized the inherant weaknesses of our own business by purely concentrating on the China market, and five years ago developed plans to expand elsewhere in Asia. Now we are in India and Vietnam, shortly to open in Singapore, and those additional markets provide us with a ‘hedge’ against China and an additional opportunity. They are also now productive for us (after some initial investment of course).

    Failures of companies in China are typically either a poor business model, or a one-sided view of how China is really doing. The press feeds you good news here, it all looks rosy. But when the economy starts to slide, and GDP and investment drop – which looks like happening – where else can you make that up? China based businesses, for my recommendation, should start to look at expanding beyond the borders of China and more into Asia to both hedge against the one country risk and take advantage of opportunities right on the doorstep of China itself. The China plus one (or two or three) strategy is in my opinion the way ahead for China based businesses, catching up with the sizeable growth ripples across Asia that China’s own success has made.

  2. Mullins says:

    July 30th, 2010 at 11:37 am

    Love him or hate him – he’s the man. Well said Monsieur CDE.

  3. George says:

    August 1st, 2010 at 11:15 pm

    Request for post:

    Recently All Roads had a post contemplating if China is Expensive.

    Well, China just got more expensive, perhaps even much more for the masses and it’s surprising that All Roads did not post about it.

    I’m talking about the new regulation about taxation of imported items and various modification to customs regulation, and the fact that now it’s going to be enforced. The impact on taobao and various other small sellers and all those who rely on importing goods such as milk power must be quite noticeable. Fedex, DHL, UPS are all pushing for their clients to prepare certain documents and procedure.

  4. Chris Devonshire-Ellis says:

    August 2nd, 2010 at 1:30 am

    Rich this isn’t a comment but this may help answer that guys question: http://www.china-briefing.com/news/2010/07/06/customs-to-impose-tax-on-personal-mail.html – fyi CDE

  5. Matt Whitney says:

    August 11th, 2010 at 1:06 pm

    Excellent article! Thank you. MDW