China needs new models

04 April 2011

BEIJING: Organisations like General Electric and Manpower are tackling unique cultural, social and regulatory demands as they aim for success in China.

Recruitment and staffing specialist Manpower began trading in China during the mid-1990s, and boasts 27 offices in the country.

Jeffrey Joerres, the firm's chief executive, reported that popular attitudes have changed massively, away from solely desiring the security of employment to much more ambitious, if still distinctive, objectives.

"Now they all want to be Bill Gates," he told Ernst & Young. "They want money as badly as you want money. They just want it in a different way."

As economic growth transforms the views and of consumers, it has also yielded almost unparalleled prospects for brand owners, requiring that China should not be seen as a conventional market.

"We look at it as a major client," said Joerres.

However, China's cultural values often necessitate dedicating considerable amounts of effort to form business bonds.

"It's not a handshake, it's a courtship," said Joerres. "You don't just shake hands and sign the deal. You go through these ebbs and flows of the relationship."

Another essential issue is ascertaining which area to compete in, given the increasingly wide distribution of wealth has generated both extremely affluent and very poor demographics.

"If you're going into China, you can't play in the middle to make good money," said Joerres. "You've got to decide which market you're going after."

Robert Nardelli, previously chief executive of Chrysler and Home Depot, and now holding the same position at Cerberus Operations & Advisory Company, argued that on-the-ground expertise is vital.

"If you want to be in China, a customer call has to be a car ride, not an airplane across the ocean," he said.

"You really have to make a commitment. This is a long-term game and they look for your presence to show your level of commitment. My experience is that you cannot launch and leave."

While a preference for rapidity typically shapes decision-making processes in the US and UK, such expectations should be adapted in China.

"You need to be patient, persistent and unwavering if that's the direction you want to go," said Nardelli.

General Electric is pursuing opportunities in fields such as energy, water, transportation and healthcare, and has formed more than 20 joint ventures with local enterprises.

"I think running a joint venture in China teaches you what it's like to be a partner," said John Rice, head of GE's international business.

"You better be prepared to create a win/win, or that thing is not going to work. It takes a ton of time and energy."

Among the primary obstacles facing corporations like GE are a complex political system and highly detailed regulatory arrangements.

"Yes, it's complicated; yes, it's hard; yes, it doesn't always play out the way you drew it on the charts. But you have to be there," said Rice.

Many overseas firms have stated concerns regarding the vulnerability of intellectual property and the legal stipulation of sharing knowledge with Chinese allies, although Rice was broadly positive.

"Our experience is that you can protect what you need to protect," he said. "It's a risk, but it's a risk everywhere."

Entertainment group Cirque de Soleil is also attempting to crack China, and draws a significant proportion of its staff from the country.

Long-established opinions as to what constitutes a "circus" mean the organisation has to overcome widespread misconceptions.

"We are called Cirque, but we're not a circus in the traditional sense," said Daniel Lamarre, chief executive of Cirque de Soleil.

Data sourced from Ernst & Young; additional content by Warc staff