The Value of Building Your Brand in China
3. China's economy, while changing rapidly, is inherently local. The supplier that will be the best partner in Beijing is unlikely to be the one most successful in Chengdu, and vice versa. Because relationships are everything, the concept of a strong national firm is, at most, an emerging one. Thus finding partners is a task that must be implemented on a local basis, many times over, in order to reach all of China’s markets. This doesn't mean that each prospective partner won’t argue for a national, exclusive relationship. They'll want that. But they're unlikely to be able to deliver successes beyond the local markets in which they're strongly positioned in terms of relationships.
4. Western businesses need to be prepared for the other parties that will inevitably be at the table in relationships with Chinese firms. Years ago, we hosted a Chinese delegation to the U.S. Several days were devoted to meetings with a U.S. firm, focusing on a significant joint venture that seemed to be a solid one for both firms. On the final day of the meeting, we watched as the discussions moved forward and saw solid interactions over dinner. All the signs seemed to be totally encouraging.
After the dinner, to our dismay, we heard the Chinese senior delegate lament the waste of time that had taken place. When we asked why he felt that way, his response was, "The mayor didn’t come to the dinner." In China, involvement of key government officials is a prerequisite to anything of consequence being done. There are critical third parties (e.g., government, design institutes, universities, etc.) that must be included in the relationship if it's to flourish.
Building relationships isn't the only way in which doing business in China will pose unfamiliar challenges, but it's one that must be understood and addressed by those firms that see their growth in future years including a significant level of success in China. The opportunity is clearly there, but it will challenge many firms to realize it.