Challenges In China

According to Kent Kedl, managing director in China, the number one problem, the number one challenge for companies investing in China is finding out what their motivation is. Early on, everybody was really interested in China because it’s a big population. There’s a very big difference between a population and a market, and companies really need to find out why they’re going to China, and why they’re doing what they’re doing.

Many of the times that we work with companies who would get into trouble, they find the wrong partner, they’re going into the wrong industry, or whatever, it’s because they weren’t really quite sure why they were going in the first place. Companies need to make sure that everybody agrees why they’re doing what they’re doing. The CEO, the CFO, the salesperson, the board. Everybody needs to agree that is what they want to do, because China is for the long haul.

It’s not a nine-month, mini project. You’re going to be there for a long time. It’s going to go up and down, and you’ve got to have the staying power to really succeed. The second issue in China is a lack of information. Deng Xiao Ping in 1991 gave his famous speech where he really opened up the China market, and one of the things he said is that development in China, the way forward in China, is not going to be a smooth path. There’s not a bridge to the future of China. It’s going to be, he said, like crossing the river by feeling for stones.

And it was a really good image, because there’s a rushing river in front of you, and stones picking up, you’re not sure if they’re really stones or what they are. If they’re safe or not. And if you have to gingerly put your foot up, test it, and go to the next one and the next one. That’s China. You’re going to make a lot of decisions on the basis of a lack of information.