Building a Business in China

Question: Why did you decide to relocate to China?

 

Jack Perkowski: I want to do something like a creative franchising. I had spent close to 20 years on Wall Street. And as I looked ahead, or you looked at what happened on Wall Street, I’d seen a lot of individuals identify trends and then put organizations together to get out ahead of those trends. And if you do that just right, you end up creating a franchise. And so, I got at my head that I wanted to, to do that.

And so in 1990, I started to think about what I wanted to do and where I want to do it. It could’ve been anywhere, but what I was looking for was frankly a long-term trend because I said whatever it is I’m going to do, I’m going to do it for the rest of my working career. And that’s what got me interested in Asia and China.

To make a long story short, I started doing my investigation. And I found that because of the demographics that Asia and China have very large young populations, this is what gives them their inherent growth characteristics. So I felt that Asia and China are going to be the story of the 21st century and I want to be a part of it and so that’s what motivated me to do what I’m doing today.

 

Question: What does an American CEO in China need to know?

 

Jack Perkowski: I think the first thing I need to do is to realize that the game has changed quite a bit over the last 10, 15 years. I’d say 10 or 15 years ago, China was sort of an interesting market, but it wasn’t a market you absolutely had to be in. Today, I think it’s the market you absolutely have to be in. And I would say that any company today, whether it’s US, European, Japanese doesn’t make any difference. If they’re a global leader today and they’re not big in China over the next 10, 15 years, I question whether there’re going to be a global leader at that point. China markets now become so big and so important and I think what’s happening in China is going to change literally the way industries operate around the world, and that’s the story of the next 10, 15 years. So, what you tell them in that context is they can’t simply take their model from the United States or Europe and expect to overlay it on China. They really need to go in and they need to have whoever’s going to do it for them, they need to really understand what the China market is all about and then adapt to their company strategy or at least create a separate strategy for China.

I think the biggest mistake people make is they say, okay, we’ve got a business in the United States. We’re going to go to China. We’re going to do it exactly in China the way we do it in the US.

And that doesn’t recognize the fact that China is substantially in a different place than the US in terms of economic development. So that’ll be the first bit of advice.

The second bit of advice is they need to, as quickly as possible, develop and empower a local management team. They need to really get very good, loyal Chinese managers that are in their camp that are running their operations in China. Running them, not just taking signals from somewhere else.

 

Recorded on: September 22, 2008

From his perch on Wall Street, Jack Perkowski foresaw the emergence of long-term trends that drew him to China. Now others try to follow his example.

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