The Value of Building Your Brand in China
About a decade ago, businesses became aware of the magnitude of challenges associated with doing business in China and other emerging markets. For the most part, the customers with whom they'd be doing business with were still "the usual suspects," so the challenges were mainly around operations and logistics.
Some time ago, a client showed us his "nightmare room." The walls were covered with 11 world maps, one for the present year and one for each of the next 10 years. Pins showed the locations where major customer support was occurring today and where it was forecasted to occur. From a sparse pin collection concentrated mostly in North America, the sequence resembled a pincushion.
The strategic advice we provided involved focusing upon existing customer relationships and identifying how collaboration with those customers could facilitate entry into new countries. We emphasized that the challenge of the pincushion was also an opportunity to deliver increasing value to customers, helping them to deal with the complexities of new global markets.
A senior executive involved with the "nightmare room" story concurred with our assessment. He noted that his firm now attributes nearly 40 percent of their sales to customers in new markets — new markets that accounted for less than 5 percent of the company's sales a decade ago. "In 1999, we should have bought an additional box of pins and just stuck them into random locations in China. It's now our largest single market, surpassing the U.S. last year," he said.
This firm's experience isn't unusual. China continues its record of extraordinary growth, with every year consistently showing increases at or near the double-digit range. The progression of the Chinese income distribution has reflected that ongoing growth. Chinese consumers now have an appetite for products and services that were only dreams a decade earlier.