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September 27, 2005

Where's the Beef?

Irrational Exuberance 3, or, Should You Enter the China Market?

[This post is the third in a series designed to help you formulate and evaluate your plans to enter the China market. See this page for links to the audio and text files of prior posts in the series. NB: More recent articles are listed at the top of that page with earlier articles below them.]

If you are American, you may remember Clara Peller and the 1984 advertisement for the Wendy’s fast-food chain. [Click “Watch Now” on this page to view the ad.] She found a competitor’s hamburger wanting and famously asked, “Where’s the beef?”

Dare you look at your own business plan for China and ask of it that same question?

Have you marshaled sufficient evidence that genuinely confirms your expectations? In other words, have you done your homework well? Or will careful and skeptical questioning reveal that your due diligence was shallow, your thinking uncritical and your conclusions erroneous?

Do not let the China Dream become so precious as to obscure what might really be waiting out there for you and your company.

“It was a miracle of rare device,

A sunny pleasure-dome with caves of ice!”

[Allow some beauty into your day and read aloud Coleridge’s brief poem, “Xanadu,” inspired by fantasies of China and a poem heard in Coleridge's dream.]

Often we value our dreams, thoughts and creations too highly, failing to see with a more objective and critical eye, that which we are missing.

With this in mind, let’s take a look at how we might go about looking for “the beef” in the plan.

OK, SO WHERE’S THE BEEF?

Let’s deal with the first paragraph of our hypothetical plan to enter the China market:

1. Setting up an office

a) Define the functions of this office and those who would staff it.

b) Define support requirements from relevant departments stateside.

c) Pinpoint the location of the office and the coverage that location enables.

d) With counsel, decide upon the legal form of the office and note any restrictions upon your business it may create.

Let us also assume that we did some homework and came up with a more detailed plan:

1a) Office function: Company intends to establish a sales office, as a base for management and as meeting area for the sales force during meetings with customers or management. Sales staff are expected to be on the road constantly and will not have permanent desks. Staff expected in China office: sales manager (male), one secretary (female), 5 salesmen (all male). All local Chinese.

1b) Support: Corporate office in the US will provide all sales support, including marketing and technical support.

1c) Office Location: Shanghai, Pudong Area, Financial District. Coverage enabled: nationwide

1d) Legal Form: Rep office, no significant restrictions.

LOOKING WITH A CRITICAL EYE

Now, let’s look at them, one by one, with a critical eye, always asking the question, “Can we really do that?” Here are a few examples of this kind of critical questioning.

1a) Office function:

• Is it practicable or advisable to keep sales staff on the move constantly in China, without giving them a physical location at the office to return to?

• Can or should the sales force be entirely male? Can I hire a male secretary? Should we hire all local Chinese?

1b) Support: What difficulties can we expect to encounter when our sales force is located on the road, 12,500 miles away and 12 hours ahead of the corporate support staff?

1c) Office Location:

• What are the benefits and disadvantages of locating our small office in the Pudong Financial District?

• Can we really cover nationwide clientele from Pudong?

1d) Legal Form:

• Can we conduct sales activities from a representative office?

• Are we really allowed to market, sell and distribute our product without legal or structural restrictions?

We’ll cover the bases, so to speak, in our next post.

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