Business lessons for NZ exporters
The list of the 12 official partners and sponsors at
2018’s Fifa World
Cup finals in Russia may have surprised a few. There were the usual household names like Visa, Coca-Cola, McDonald’s and Budweiser, but there were as many brands from China as the United States.
The Chinese football team didn’t even make it to Russia, but Chinese companies embarked on pricey sponsorships – partly to build credibility back in the huge China market. But they also represented the increasing trend of Chinese brands expanding into markets beyond China.
In 2000, mainland China was home to nine Fortune-500 companies. By last year it had 124, passing the US’s 121 for the first time. Many of these brands, cash-rich from their enormous revenue base in China, are carving out an increasing share in markets elsewhere in Asia and beyond.
Kiwi exporters selling in China are likely to be very aware of the rising force of Chinese brands, but few would consider them competitors in other export markets – or even potentially in New Zealand before too long.
Yet Chinese brands’ ambition and structure have established them well to compete in the increasingly dynamic, digital and competitive world that we trade in. Chinese brands are becoming more premium and are even rising in New Zealand’s main export category of food and beverage – one of the sponsors at Russia’s Fifa World Cup was dairy giant Mengniu.
Just as Chinese consumers think and act differently from their peers in the West, Chinese businesses are systemically unlike most Kiwi businesses, and Western business in general.
The most obvious difference is the speed at which Chinese businesses adapt, relative to businesses from other countries. Many people who have spent time in China talk about
‘‘China years’’ in the way they talk about ‘‘dog years’’, meaning what happens in one year in China could take seven years in other countries.
Since opening up in 1979, China has transformed at a rate never seen before. Most Chinese have only ever known constant change and, as a result, can adapt quickly through rapid decision-making. This agility is much like the lean startups of Silicon Valley, but it spans almost every industry in China.
Unlike most Western businesses, which utilise collective decision-making, many Chinese businesses leave decisions to the CEO. This means fewer gates in processes, resulting in faster decisions.
The goals of large Chinese companies are often different from Western multinational corporations. Large Western businesses are generally risk-averse, and strive for scale, efficiencies and profit. Chinese businesses are often more concerned about revenue than profit, and focus on growth and market share. To get there, they have an inherent appetite for risk, making them formidable competitors.
The most visible difference between Chinese and Western businesses is how quickly they adopt digital trends. Over the past decade, China has gone from a copier to an innovator in the tech space. Many of the new features on Amazon or Facebook have been out for years in China, so their brands have had time to test and optimise their approach for them.
There are a few things that New Zealand companies can do to compete with Chinese companies in China and outside:
■ Stay abreast with what’s happening in China and learn from it, tapping into NZ Trade & Enterprise resources and newsletters like China Skinny, and regularly visit the country – when we finally can.
■ Review your structure, sales incentives, product development, marketing and decision-making processes to ensure that they are optimised for adaptability. ■ Don’t be afraid to take calculated risks – some initiatives will fail, but learn from the experience.
■ Look at digital solutions to connect with customers and to make your business more nimble and datacentric.
■ Capitalise on NZ’s strengths of ingenuity, No 8 wire and trustworthiness – but don’t be shy about copying what is working in China and other countries and putting a Kiwi polish on it (even the world’s most innovative businesses copy ideas).
■ Keep supporting your hero products and services, but consider new ones that meet customers’ increasing diverging needs and desires, even if it means having a larger portfolio.
■ Don’t try to do everything yourself – Kiwis may be capable and sway towards DIY, but we can’t expect to know everything – no-one does. In markets that are so drastically different, such as China, utilise resources that are on the ground.
Most Chinese have only ever known constant change and, as a result, can adapt quickly through rapid decisionmaking.