CEOs must walk a fine line while doing business in China—where the opportunities are massive but the room for error is small. One wrong move, and you can be effectively uninvited to the party.
Question: What is the best way for companies to succeed in China?
Stephen Miles: So I think China is a specific problem and opportunity for every company, pretty much every company because they are a dominating force both in their domestic market as well as their offshore market and I think A) you have to take China seriously and B) China is a very nuanced environment that many of us don’t understand completely yet and I think the way you do well in new environments is to experiment. You just don’t go in thinking you know it all. What you do is you go in and experiment and some of the most successful experiments so far in China have been going in and creating joint venture relationships with Chinese partners where there is a 50/50 relationship or 51/49 and you learn how to operate in this nuanced environment and be successful.
The opportunity in China is massive, but I think again companies have to be cautious around- you know where there is great opportunity there is also great risk and I think you have to not go in blindly, but you have to go in, in stages and I think you have to experiment through each level of those stages in order to successfully make it to the next stage and you see companies for example, in the computer business. One of our domestic large computer manufacturers has gone in. They do engineering in China. They build in China and they sell in China and they’ve been certified with the highest level of certification for a non Chinese company, so they can supply the domestic market and I think those sorts of things really matter. You have to go in and become part of the culture, become part of the fabric and lend yourself to we aren’t just making boxes and shipping them to China, what we’re doing is creating thought leadership and we’re creating design centers and engineering excellence, the higher order aspects of the role and then we get the opportunity to sell into the domestic market.
I mean the thing about China that is really hard is that they can decide that you’re uninvited and then they become your worst- then they can become one of your greatest competitors, so I think that is why the experimental piece is really important, so going step by step by step and using joint ventures is a powerful way to sort of gain entry and gain knowledge on how to be successful.
Recorded January 12, 2011
Interviewed by Max Miller
Directed by Jonathan Fowler
Produced by Elizabeth Rodd
Image courtesy of Flickr user lkiller123