This was the story I heard from a business contact I met with a couple of weeks ago. He works for a large chemical manufacturer with a presence in China, and they needed their website translated into Chinese. His choice was to hire a local student from China for the job. Once he presented the translation to his Chinese business partners, they weren’t impressed — the errors actually made him and his company look less professional in their eyes.

My point here isn’t to criticize Chinese students. There are no doubt Chinese students studying here in the US who can produce fine translations. But without knowing their abilities, you’re always taking a chance and, ultimately, putting your company’s reputation on the line. Keep in mind also that, since they are students and usually new to US business culture, they will miss the nuances or terms that are so second nature to us we don’t even realize they’re idiomatic or culture-specific.

I always remind people that, between me (US native fluent in Mandarin Chinese) and my husband (Chinese national fluent in English), we understand the business cultures of the US and China. We also cover the entire linguistic field and, when we collaborate on a translation, the result is the message you intended in the first place.

Seems simple enough — that translation was meant to translate exactly what you wrote in the beginning. But sometimes your intention isn’t enough to get it right.

It’s not a surprising reaction. This supposedly “Golden” year of the Pig is turning out to be more porcine than prosperous, thanks to the slew of recalls — especially for toys. It hasn’t been great PR for China, as evidenced by this “man-on-the-street” piece with interviews of Clevelanders. Just about everyone in the video has sworn off Chinese products. (Whether they’ll be able to stick to that is another story…)

The subject of embarrassing recalls surfaced over a lunchtime conversation with my brother-in-law’s colleague, Mr. Wu, in China, back in July. My arguments hit the usual suspects — such as the manufacturers’ shirked responsibilities.

Mr. Wu didn’t disagree. But he did make a rather compelling point — what about the US companies? They also have a responsibility for quality assurance. Plus, China is a developing country. While the US has been doing due diligence in business for at least 50 years, if not more, China has only seriously cleaned up its act within the last 10 years or so. Has the US forgotten that it too has a tarnished history of manufacturing substandard and dangerous goods — one that it overcame only through experience and robust law enforcement (two resources that China desperately lacks)?

We easily forget the snake-oil sellers of the 1800′s, or the deplorable conditions of meat-packing workers described in the Jungle or the current muckracking classic Fast Food Nation. We have amnesia about our vulnerable food supply, evidenced by the E. coli Spinach scandal of 2006. Many of China’s mistakes were made here in the US long ago, and some continue to surface every now and then — a reminder that even we, a superpower, can’t always remain in control. Yet it is so easy to push the blame on a developing country — and neglect our true involvement in the making of a scandal.

When US companies manufacture in China, they have a responsibility to ensure quality — just as their manufacturing partner does. Of course, they want to find reliable partners who are less likely to have quality transgressions, and thus require less supervision. Yet, perhaps some US companies turned too much of a blind eye. They clearly didn’t have a handle on what was really going on in their factories. In some respects, they did not provide enough oversight on the ground — something that many of the “rising stars” in the China manufacturing world, trustworthy though they may seem, might require. Compared to their US counterparts, these manufacturers haven’t been in the game that long. They have a hard time keeping a long-term perspective about anything — because their successes have been fast and intense. China’s law enforcement is also notoriously unreliable, which trickles down into the manufacturing environment.

I am not absolving the Chinese manufacturers of their wrongdoing. Breaching contractual agreements — especially when it can endanger the health of the end-user — is just not good business.

But perhaps Mattel does owe their Chinese manufacturers an apology too. If Mattel failed in their supervision, in setting a standard and tenor for their Chinese partners, they hold equal responsibility for the recalls.

This contemptuous attitude towards businessmen no longer exists in current China. Making money is given priority now.

However, problems come up when this priority may be the only consideration for many businessmen in China. Media reports that forced laborers are widespread in Shanxi province, and many of the victims are children. One brand of toothpaste from China contains diethylene glycol that can poison people. Gluten sourced from China was tainted with melamine that killed dozens of cats and dogs in the US.

Many businessmen in China are not well-educated. They are motivated by a single clear goal — making money. They have no idea how their products and business behavior would influence the health and well-being of other people. Many of them are not conscious about business ethics and social responsibility.

In China, due to the overall education level, the general public has limited knowledge about certain products, such as tools that may use harmful chemicals or foods that contain unhealthy ingredients. Many detrimental effects of the products are cumulative and not immediately seen. So monitoring from the public sector to the business sector is not so strong.

The supervision from the government to businesses is also weak. The government officials are not so fervent about the interest of general public. They care about meeting the economic development benchmarks set by their superiors. Those bosses — scrupulous or not — will help them attain the goal. Bosses and local officials are on the same boat. It is very unlikely local officials will trouble the bosses.

The law in China is also under development, which means that many areas of business are not regulated. When the law is underdeveloped, unscrupulous businessmen usually can take advantage of the weaknesses in laws. Even when the law is well-developed, such as in the USA, there are still examples of corporate fraud like Enron.

A better solution is to voluntarily adopt and practice business ethics and moral standards.

When doing business in China, you should assume social responsibility and adopt moral standards, especially when dealing business with Chinese counterparts. Sometimes it may be the only strong oversight available.

Interested in learning more about business and marketing in China? Here’s a peek into what’s on my list for this summer and beyond.

1. One Billion Customers: Lessons from the Front Lines of Doing Business in China (Wall Street Journal Book). James McGregor’s insider’s view of what doing business in China is REALLY like. What’s interesting about this former Wall Street Journal China Bureau chief is his humble start in the country. He is not a highly degreed academic, but rather a self-made high-school dropout who wandered into China after serving in Vietnam. You wouldn’t know it from reading his book. I especially appreciate his approach, using real-life examples and then providing commentary on how it might be applicable to anyone pursuing the China market.

2. The Search for Modern China. To understand the business dynamics in China, you’ve got to know the history. Try Jonathan Spence’s look at modern Chinese history, which takes a wholly un-Eurocentric point of view and does so in refreshingly unpretentious language. If you’ve never delved much into Chinese history, this is a terrific introduction.

3. China and the Global Economy: National Champions, Industrial Policy and the Big Business Revolution. Economy — it’s the reason we’re all drawn to China. Find out the story behind China’s economic powerhouse in this book. Given Nolan’s role in the WTO negotiations with China — he was one of just four world experts invited to consult — he’s clearly worth listening to.

4. Wild Grass: Three Stories of Change in Modern China. We often understand China from a big picture perspective; now it’s time to get a little more personal, with help from former Wall Street Journal China bureau chief Ian Johnson. Johnson tells the tale of three individuals who represent China’s “average Wang” — a self-educated lawyer fighting against local government corruption, Beijing homeowners facing home destruction by the behemoth real estate companies, and Falun Gong practitioners.

5. China’s Global Reach: Markets, Multinationals, and Globalization (Revised and Updated Edition). What’s behind the bureaucracy in China? Go behind the great iron curtain with Zhibin Gu. He’ll also reveal a number of secrets along the way to doing business in China, with real-life examples from global multinationals.

When I say Chinese weddings are a topic dear to my heart, I write these words with a certain authority. As you read this, I will be putting the final touches on a ceremony to be held in Zhejiang Province early July.

All the romance aside, let’s face it — weddings are big business. According to Rebecca Mead, it’s a $161 billion industry in the US. I don’t have the numbers on China. But if the wedding photography stands near the Metro stops in Shanghai are any indicator, there’s big bucks behind those white veils and banquets in the Middle Kingdom. People in China really do pay top dollar for their ceremonies.
That means potential for enterprising foreign companies who can fill a need.

So let’s talk weddings — the business side and the opportunities.

How much do people in China spend on weddings? This article (Chinese) claims about 10,000 RMB or about $1,200. Another article puts the tab at 100,000 RMB or $12,000. Whatever end of the spectrum you’re at, it’s still an imposing chunk of cash. Remember that average Chinese earn anywhere from 1,500 to 3,500 RMB (~$200 – $450) a month — some more, some less. Anything beyond that range is already within the realm of “upper class”.

What about the timing? We’re busy tieing the knot in the summer, while our Chinese counterparts just can’t take the heat (except in the far Northeast and cooler areas). The big wedding rush seasons are the New Year (both Western and Chinese), the Labor Day Holiday in May, and the National Day Holiday in October. If you want to book your facilities or services during either of these times, take a number and line up.
Let’s talk services…some warrant more attention than others. Perhaps the most lucrative of all is the wedding photography.

Ah, wedding photography. Chinese routinely spend upwards of 5,000 RMB (~$600), sometimes even more, for a Hollywood rendering of the happy couple. That’s right — this is all studio work, not a shred of it goes on during the actual wedding ceremony. Think GlamorShots for weddings. And many couples choose not to have professional photographers at their weddings, instead taking the studio photography work as a monument to their big day. Currently most of the companies doing this work are based in Mainland China, Taiwan or Hong Kong — but there is a growing demand for high-end ultra artistic work. The phrase “picture perfect” comes to mind because people are willing to pay top dollar. Even those couples who eschew having the whole formal wedding party still get the wedding photography done to show they’re official.

There’s another must-have in China — wedding candy. I remember finding the little twin boxes on my desk on a Monday morning, a sweet reminder that some unknown individual in the workplace tied the knot just that weekend. Wrapped in packaging evocative of traditional China, often with red and gold, wedding candy is distributed during the wedding and, as I mentioned above, afterwards to work colleagues. A number of foreign companies are already on board in this industry, including Dove.

Western bridal gowns are very de rigeur in China. Most brides, on average, wear three gowns and one most certainly is the traditional white we’ve come to know and love.

And then there are countless other products and services in demand for weddings in China, including:

• Chauffeurs/rented luxury cars
• Catering/banquet facilities (including lavish multiple-course dinners)
• Emcees for the wedding
• Videorecording of the wedding
• Makeup and hairstyling on the wedding premises (since brides change their dresses)
• Hotel rooms reserved for guests and the couple
• Wedding rings

The popularity of Western bridal gowns may suggest room for more Western traditions in the whole ceremony. Things such as having DJs or doing the whole church ceremony (there are more Christians in China than communist party members).

On the other hand, if your product/service could fill a distinctly Chinese need (such as the overembellished wedding photography), your mission is to stand out from the crowd. Take a look at the Shanghai wedding photography market, for example. Two leading photography providers have alluring foreign cities in their names: Paris Bride and Milan Wedding, suggesting that the experience of Western-style romance is attractive. What’s your twist?

We could learn a lot from Starbucks on this front. Their store in the Forbidden City has generated enough negative PR to warrant high-level government discussions on closing it for good. Why? Because the move was perceived as an imperialistic invasion into one of China’s most sacred and beloved cultural icons. With China’s recent history of foreign marauders coming in and setting up shop there — without the blessing of average Chinese — the reaction is not surprising.

So if a Chinese official gives you the green light to open up at the Great Wall — or any other iconic cultural location in China — think twice.

2. Fudge your Chinese translations.

Chinese translation is sadly undervalued in the business world. Companies pay hundreds of thousands of dollars for branding, marketing, design and PR — but some expect to get their marketing materials and corporate identity translated on the cheap by a Chinese student. What’s the harm? A lot. Let’s say you do get a Chinese student to do your translations. If that person has little experience in the business world of your country, they may end up using the wrong terminology. Jean Jameson, a professional translator in the UK, underlines the potential risk in her article “Prevention is cheaper than cure“. Here’s an example:

A textile design company went to Shanghai for a major exhibition several months ago, and engaged a Chinese student to translate its marketing brochure. At the exhibition confused visitors pointed out that the brochure did not make sense – the Chinese student had translated ‘rug’ for ‘cushion’!

It could get even more embarrassing if it’s your tagline, company name or your actual name — these are the core of your company’s image.

Remember, your marketing materials and corporate identity are communicating for you when you’re not around, like a Chinese sales rep in print. Will yours be wearing sleek Armani or plaid polyester? The choice is yours.

3. Confuse Japan and China.

China has a love-hate relationship with Japan. They love the economic benefit of Japan’s investments and export purchases from the Mainland. But most average Chinese still hate the island nation. Some of the sweetest, most gentle Chinese people have surprised me with their poisonous diatribes on Japan. It’s not shocking when you consider that the Japanese occupation from the late 1920s to the 1940s was akin to the Holocaust for Chinese.

Yet Westerners continue to conveniently lump together all East Asian cultures. As far as some are concerned, if they look the same, the culture is the same.

This is complicated by popular culture, where Asians even take on roles outside of their respective cultures — sometimes, with volatile results. For example, the recent movie version of Memoirs of a Geisha intermingled Chinese and Japanese screen stars, and had cast mainly Chinese actresses as the leading geisha in the film. Anyone following the news also knows the film was banned in China. The primary backlash stemmed from — what else? — its portrayal of Chinese women as high-class prostitutes, a bitter reminder of the Chinese “comfort women” enslaved during the Japanese occupation.
So, take note: samurai, geisha, teppanyaki, sake, kimonos, manga. None of these are Chinese. And they may be to your conversation what the A-bomb was to Hiroshima.
4. All work and no play.

Remember the Shining and what happened to Jack? All work and no play also makes you a very dull, very undesirable partner to the Chinese.

Here in the US, we’re used to separating business from pleasure. We like to “get down to business,” so to speak. And when the meeting’s done, we shake hands and leave the office.

In China, the meeting is just the beginning. Chinese business partners invite you to elaborate teas, banquets, karaoke parties and even weekend trips to Hong Kong. You get chauffered around in the utmost luxury. All on your Chinese partners’ tabs.

After a few rounds of this, you’re just about ready to put on the breaks the next time you hear an invitation to chifan (eat dinner).

I’ve got news for you. When it comes to doing business in China, all of the above is just par for the course. Some of the most important headway between you and your prospective partner will probably happen while you’re crooning “Edelweiss” (a perennial favorite) together in a karaoke bar.

There’s another reason you shouldn’t miss the socializing. It just might suggest you’re not interested.
In China, people put a premium on the relationship. They want to know you and build trust. That kind of connection only happens beyond the office. I’ve heard from many execs that, by spending more leisure time with their Chinese partners, they experienced major breakthroughs in their business relationships.

5. Ignore superstition.

Superstition in China runs stronger than the Yangzi River. Even Chairman Mao’s Cultural Revolution, his almost deranged assault on traditional Chinese culture and history, couldn’t stamp out superstition…though it tried.

Examples of it abound in modern Chinese culture.

Consider the upcoming Beijing Olympics in 2008. Now, the number eight is one of the most treasured numbers in China because it sounds similar to the character for making money. China already got lucky hosting the event in ’08. So guess when the Olympics will begin? August — the eighth month of the year — on the eighth day of the month at exactly 8pm.

After the seven-day Labor Day and National Day holidays, work always resumes on the eighth of the month.

The Chinese national flag is in red and gold, the two most traditionally auspicious colors in Chinese culture.

But the question remains — how could superstition derail your business?
Picture this: your prospective Chinese partner invites you to his daughter’s wedding. It’s a great opportunity to get to know him better through social interaction following the advice above. You’ve heard that giving money is pretty standard, so you take out the nicest white envelope from your suitcase and put in the equivalent of $50 — 400 RMB.

Congratulations, you’ve just communicated your death wish for the new couple. White envelopes are only reserved for funerals, and the number four sounds a lot like the character for “death”.

Of course, this is an extreme example. Not all superstition snafus will hurt your reputation. For example, it’s unlikely that Chinese will turn the other way just because you didn’t use auspicious colors or characters in your corporate identity. But just imagine if you did. Chances are your counterparts in China will be impressed that you knew enough to go the extra mile.

Why fight superstition? Go with the flow — and watch your business reap the benefits.

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Plugin by Taragana]]> http://www.thewuway.net/archives/67/feed 3 http://www.thewuway.net/archives/66 http://www.thewuway.net/archives/66#comments Mon, 30 Apr 2007 13:43:38 +0000 Jocelyn http://www.thewuway.net/archives/66 Can red be green too — if it’s red China we’re talking about? Headlines such as “With the Olympics Looming, China Goes Green”, “China urges end to polluters’ tax breaks”, and “Greenpeace rates Apple least green, China’s Lenovo scores high” suggest a new momentum to remake China as environmentally friendly.

Let’s be clear here — green in China isn’t just some passing fad. And in some ways, being green is a lot more popular than you might think.

Case in point? Solar-powered water heaters. I remember seeing these handy green appliances at numbers of stores back in 2001, and I wouldn’t be surprised if they were available even earlier than that. Today more than 30 million Chinese households own one, accounting for 80 percent of the entire world market!

The seventh-richest man in China today — Shi Zhengrong — built his wealth on none other than photovoltaic solar cells. His company, Suntech Power Holdings, is even trading on the New York Stock Exchange. While most of his sales are overseas, it’s only a matter of time before innovation will bring the price down to something more affordable to the Chinese public.

Meanwhile, environmental groups are making headways across the country. According to this article in the China Daily, over 4,000 environmental groups have sprung up around China since 1994.

The article also goes on to highlight one of the most important constituents for a greener China — students:

In Beijing, 1,600 students attend the Number Two Middle School, an institution widely regarded as one of the best secondary schools in China.

The school is revered for producing some of the country’s best and brightest, yielding students who receive top scores on China’s annual college entrance exams.

The students at Number Two stand out, however, not only because of their academic achievement, but because of their enlightened attitude toward the environment.

Over the last few years, especially since Beijing was awarded the 2008 Olympic Games, environmental awareness has gotten a new emphasis among those who will be the next generation of China’s educated leaders.

Manufacturers in China are thinking green too. I referred to Lenovo above. Add to them a number of smart and savvy green Chinese automakers, who understand that being green means profitability for the future:

One experimental clean-energy car runs on natural gas. Another uses ethanol distilled from corn. A third has a zero-emissions electric motor powered by a hydrogen fuel cell.

These alternative vehicles were created not by a global automaker but by China’s small-but-ambitious car companies, which displayed them Sunday alongside gasoline-powered sedans and sport utility vehicles at the start of the Shanghai Auto Show.

At a time when they are still trying to establish themselves in international markets, Chinese automakers are already investing in such avant-garde research in a bid to win a foothold in the next generation of technology.

“This is the tide of the industry. If you don’t go with the tide, the industry will pass you by,” said Qin Lihong, a vice president of China’s biggest domestic automaker, Chery Auto Co., in an interview ahead of the show’s opening.

It’s not just “the tide of the industry” — it’s the tide of China. A green tide. The market is there and growing…so don’t let it pass you by either.

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Plugin by Taragana]]> http://www.thewuway.net/archives/66/feed 1 http://www.thewuway.net/archives/65 http://www.thewuway.net/archives/65#comments Sun, 22 Apr 2007 22:57:45 +0000 Jocelyn http://www.thewuway.net/archives/65 Mr. China: A Memoir is a book for all of us who have ever longed to “crack” the China market and Chinese culture — and come out as the ultimate “Old China Hand”. “But in the end, it’s an illusion” states the author Tim Clissold of this pursuit. He should know — he’s gotten about as deep as you can go in China, from a meager Mandarin student in Beijing to a respected investment advisor hobnobbing with high-ranking Beijing officials, traveling from the chilly Northeast to the desert of Western China and all points in between. It’s been a wild and humbling ride for him, and Clissold tells all — at least the most salient points — in this striking memoir that holds lessons for anyone keen on the China market.

Clissold gets the China bug when he first travels to Hong Kong as a young man. What others describe as utter chaos becomes instead a fascinating challenge and paradigm of living:

I’d go into a restaurant and they’d tell me that there was no rice or I’d go to a bar and they’d pretend to be out of beer. I even found a restaurant in Xi’an that closed for lunch. But after a while, I learned to probe and question, cajole and persuade — and never to give in! So I barged into kitchens in restaurants to find something to eat and went upstairs in hotels in search of an empty room….Even going to buy vegetables was a challenge but I sensed a rapport with the people I met; it was almost as if they enjoyed the game of wits and they often gave me a laugh or a smile once they finally gave in. I never felt any malice from them; it was more like a bad habit that no one seemed able to break.

Clissold was, in essence, spellbound by the country, as most aspiring “Old China Hands” usually are. So much so that he found himself bored with his stomping grounds of London. In a desperate attempt to re-engage with China, he tries to persuade his managers to set up an investment office there, but ends up being all but written off as a nutcase. There was only one thing for him to do: quit his job and go to China to study Mandarin.

As the saying goes, be careful what you ask for. Just after the Tiananmen Square massacre, China warns against “spiritual pollution” making those few brave foreign souls on Chinese campuses — such as Clissold — largely ignored by the student population. Clissold’s foray into a life of Mandarin study is also short on creature comforts, from monotonous meals of cabbage and rice to a grubby winter existence of few hot showers, little heat and just-washed jeans that freeze instantly.

After a year of studying, shrinking finances force him to find work. As luck would have it, his former employer in London — Arthur Andersen — is hiring: they need someone to help investors find worthwhile projects in China. And so begins Clissold’s journey into the unchartered territory of financing the new economy.

He assembles a team to help him along the way: Pat and Ai Jian. Pat is a larger-than-life career banker who made a name in investment in Hong Kong and sees opportunity knocking in the great frontier of China. Ai Jian is an “ex-Red Guard and forced-peasant-turned-bureaucrat” relegated to a desk job at a hotel after getting into some trouble at Tiananmen, but he’s hungry to make a difference and has the contacts to prove it.

Working through Ai Jian’s contacts and beyond, the team travels across China, from the rivers of Sichuan to the frozen oil fields of the Northeast border with Russia, in search of investment opportunities, and discovers a hidden and sometimes perplexing world. There are mountaintop military factories looking to transition to civilian goods with unexplained colossal explosions in the background, and elaborate drunken banquets with high-ranking government officials where animal genitalia is a delicacy.

After over three months of traveling to visit factories across China — and days that “ended at one or two in the morning in the upstairs room of some awful karaoke bar with cracked mirrors and faded Christmas-tree decorations Scotch-taped to the walls” — then it was a matter of getting the investors on board. Pat introduced a number of interested Wall Street money managers to the team and, following several tense meetings in China, they eventually agreed to a deal: $158 million to be invested in manufacturing plants throughout China as joint ventures. Contracts were signed and money was wired to their chosen partners in China.

This is where the fun begins — not for Clissold, but for us — when every imaginable thing that can go wrong does. The businesses start falling behind budget, and closer investigation reveals more problems than the team bargained for. Millions of dollars disappear overnight, unaccounted for (in one case secretly laundered to unknown offshore locations). New unauthorized factories spring up, some as direct competition to the joint venture, and others manufacturing products that investors didn’t approve. Reckless managers infest the factories, threatening complete shutdowns or utter chaos, and resist any extermination attempts. And then there are the grossly unqualified products, such as where a beer factory churns out a bottle with brown liquid inside and the words “soy sauce” scratched out on an old label.

But it isn’t the situations that make this book fascinating — it’s how Clissold and his team responds. In doing so, Clissold ends up making every mistake imaginable and, from our retrospective viewpoint, the results are quite often nothing short of hilarious. It all comes down to assumptions:

Wall Street’s theory of “private equity investment,” investing in private companies like we had done in China, was based on two principles. First, that the system of law and other controls are reasonably effective in dissuading business managers from helping themselves to the cash, and second, that a management team will work hard over long periods for clear incentives. Under these conditions, the theory goes, the management team can be left reasonably free to run the business and report to a board of directors that sets budgets and reviews progress. We had applied this model in China — and it was obviously not working.

His egregious mistakes become lessons for the rest of us as he and his team scramble to bring order back to their nascent investment projects. Clissold battles with bankers, the legal system, the anticorruption bureau (which famously asks for a car and money before providing assistance), complicated personalities, misplaced employee loyalty, and hidden assets. If we pay close attention (after wiping our eyes from laughing so hard) we’ll be the wiser next time we set foot in China.

Even while we have a good time at his expense, Clissold teaches us a wealth of knowledge about China. Clissold has a passion for Chinese culture — a passion so deep that, at the nadir of his misadventures in China (just as he is about to turn his back on the Middle Kingdom) it beckons him once again to this rich country. He graciously shares cultural anecdotes, a primer on the beauty of the Chinese language and delightful insights into what makes China so fascinating for outsiders. With Clissold as your guide, you come to peel back the layers of this country, seeing beyond the grueling banquets and puzzling bureaucracy, and are left with a sense of respect and admiration for a country that we can only hope to understand and appreciate, not conquer.

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Full disclosure: yes, the links in this article are affiliate links to Amazon — but I’d still be linking to this book even if I wasn’t an affiliate because it’s a terrific read. </em></p>

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Plugin by Taragana]]> http://www.thewuway.net/archives/65/feed 0 http://www.thewuway.net/archives/56 http://www.thewuway.net/archives/56#comments Thu, 22 Mar 2007 02:16:15 +0000 Jocelyn http://www.thewuway.net/archives/56 Jocelyn: Good morning, this is Jocelyn, we’re at the Wu Way, this is January 29, and I’m here at the BP Building and I have the pleasure of meeting with Gary Wells, who is the Senior Managing Director for Media Relations and Global Communications for Dix & Eaton. I might add that Gary is a very well-traveled man. He continues to help broaden Dix and Eaton’s capabilities and has helped establish media affiliations in 65 markets, right?

Wells: A little more than 65, around 75.

Jocelyn: Okay. And including in the China market, such as Beijing and Shanghai. I’d like to talk to him today about international communications. Gary and I were just discussing Starbucks and an interesting point about…that you have to be careful about the kind of message to a country when you’re trying to move your brand into that market. Right?

Wells: Good morning, Jocelyn. I think it’s critical for any company moving into a global market, an emerging market, is to keep in mind cultural sensitivities. Okay? Of all US companies, Starbucks is generally the most alert and sensitive to such cultural issues…but lost sight of that with their decision to accept an opportunity to put the franchise inside of the Forbidden City. It’s one thing to install a Starbucks or any other American fast food restaurant in a shopping plaza, in a business center where there’s high traffic. It’s another to install what could be considered a foreign invasion in one of the most hallowed sites in all of China, the Forbidden City.

Jocelyn: Right.

Wells: The larger point here is for the global company building into an emerging market. It’s not enough to have a proprietary service that is in demand, you have to understand the cultural sensitivities. For China, for India, for other countries as well, these are countries that have for decades, for centuries were ruled and subjugated by foreign powers. They have long institutional memories. While they may not go looking for slights, perceived or real, they are very aware of slights as they see them. So the decision to install a Starbucks inside of Forbidden City couldn’t be taken any other way than something as an insult and somewhat as a slap in the face. I think Starbucks has handled the situation quite well, to their business savvy, some companies perhaps would not. I doubt they would make that mistake again either in China or in someplace else.

Jocelyn: Yeah, it’s interesting. I think it’s a great example of what can go wrong when you don’t think about how the media or how the public can perceive the message, maybe covert or overt, that your move in an international market may imply. And maybe, I was wondering if you could tell me some other examples of the challenges that a company might face when they’re trying to establish themselves in another country, some examples that you’ve seen from your own work.

Wells: I think if you’re a global company and you’re looking to establish operations, if you see a market for your product or service in central market countries Brazil, Russia, India, China…you have to understand the market forces, but also the culture sensitivities. Also political issues as well. Most companies will look at China and India as probably the two most important markets or two of the most important markets. Very different, very differently organized in terms of their politics. One of course is the People’s Republic of China is a Communist government. More of a market economy than ever before…but still run by the Communist party.

Jocelyn: Right. They call it – what is it — Capitalism with…no it’s…Socialism with Chinese characteristics, I believe.

Wells: And I think that China, to its credit, learned a lot by watching the mistakes that Russia made. Look at India, India is normally the world’s largest democracy. It’s a very messy democracy. Even though that’s a dichotomy when you talk about democracy as messy, it shouldn’t be. However, in India, there was such difficulty pulling the country together some sixty years ago when the British left, that I think a lot of the princedoms, fiefdoms, empires if you will throughout India were given considerable autonomy but the states inside India have considerable autonomy instilled. If you’re Microsoft, and this is a real example, if you’re Microsoft and you look to expand operations throughout India, at the same time you do understand the importance of helping the country and its people in a land where poverty is ripe….For example, the Gates Foundation, the Bill and Melinda Gates Foundation sends money for helping a variety of schools there. But in one state, the governor…thought that Microsoft was too much of a monopoly, and instructed the schools not to use Microsoft Office. Despite the fact that the company had products that were much in demand, had through its foundation, contributed a considerable amount of money to easing poverty and improving the schools, [that still was the governor’s decision]. Microsoft, to its credit, also reacted specially by making sure there was even more in the way of free software and free education to this particular state as well, and the governor relented. But that’s the sort of issue that a local company faces there and I’m afraid that not many – outside of a Starbucks or Microsoft – are as alert to these issues as they should.

Jocelyn: Sure. You know, that makes me think about how, you know, you talk about autonomous regions in India, you know, of course China has quite a few of its own. Like Xinjiang is an example of an autonomous region. Of course, countries such as India and China, they have thousands of years of history of these regions operating as just separate states. And each has its own culture, its distinctive identity. A lot of times, we come into a market, we assume that that market is just, you know, it’s all one homogenous being, you know, it’s all what we see in Shanghai or Beijing or in the case of India, New Delhi.

Wells: Particularly in a market as gargantuous as China — so many regions, so many cultures, languages or dialects – it is absolutely incumbent on any company…consumer products, business products – to understand the cultures where they establish operations.

Jocelyn: Right.

Wells: If you’re in the north, you’re in the south, it’s a much different operation. You’ve got to be aware of which dynasty ruled going back centuries, you’ve got to be very alert to not just the current issues but the past issues as well. It has an impact on how you’re perceived in the community, it has an impact on your ability to recruit employees for a region in China as well. It’s a huge issue for companies moving into China or India. The war for talent is acute. If you want to attract the best and the brightest, to borrow a phrase, then those people have to look at you as a tremendous opportunity. And not just to join your organization, but to stay with your organization. They have to see that there’s opportunity for them to grow. You also have to be well-regarded, well-respected in the community because they have to save face in the community as well.

Jocelyn: Sure.

Wells: If you don’t have a good reputation in the community, if you’re not seen as contributing to the community, you may have a difficult time even further attracting, much less retaining, employees.

Jocelyn: That reminds me of last year when you spoke at the [Going Global] panel and that was something that you had emphasized, was the internal communications in a company, correct? And that’s something that a lot of companies who go global, they often overlook this small piece of the puzzle that can be so important in perhaps, as you said, retaining employees and reminding people of the value they get from the company.

Wells: It’s actually reminiscent of the story over centuries about workmen in France. One of whom is asked what he’s doing, says he’s cutting stone. Another is asked what he’s doing, says he’s mixing concrete. Another is asked what he’s doing and he says “I’m building a cathedral.” He’s got a much larger vision and he’s part of a larger team. And if you’re establishing operations in China, or in India or elsewhere around the world, it’s not an isolated facility. Those aren’t people who work in isolation. Those are people who are part of a larger team. They will feel much more engaged if they understand they are part of a team which means introducing them – perhaps electronically, perhaps personally – to others on the same team, either in the same country or elsewhere around the world as well. It’s hugely important and I think too many companies miss out on that too.

(To hear more about Gary Wells’ views on international communications and China, listen to our full podcast. Total time: 18:32….WARNING – this is not NPR quality on the recording side, but it’s a great conversation.)

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Plugin by Taragana]]> http://www.thewuway.net/archives/56/feed 0 http://www.thewuway.net/archives/57 http://www.thewuway.net/archives/57#comments Fri, 16 Mar 2007 20:51:35 +0000 Jocelyn http://www.thewuway.net/archives/57 Seems like Shanghai, Beijing and other major cities in China are the current darlings of the international business world. Who can blame them? The breakneck pace of development has produced a dizzying array of buildings, shopping malls — and accompanying stats — to make any marketer swoon.

Meanwhile, one has to wonder about the 70 percent odd people outside of China’s mega cities?

Enter McKinsey. They’ve just released a special report on Marketing to China’s Hinterland — and frankly, it’s about time. Here are a few juicy teasers from the intro:

The most attractive consumer segment in these markets consists of the aspirants: some 35 million households with average monthly incomes of about 3,800 renminbi ($475)—not far behind the average income in China’s biggest cities.

This segment is spread out among about 12,000 towns and small cities that dot China’s landscape. Companies must carefully weigh the costs of reaching them against the potential gains.

Appealing to the sophisticated aspirations of the segment and effectively sealing the purchase at the point of sale could be critical.

I think it’s a solid report worth looking into. Here’s to marketing life beyond China’s big cities!

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