The mission of Going Global, which appears on ePrairie
on most Tuesdays, is to educate and inform Midwest technology companies
on what local technology companies are doing internationally so other
firms can learn from the successes of like-minded peers.
CHICAGO – Steve Ganster is managing director of Technomic Asia.
He has 27 years of experience in international market strategy
consulting primarily in Asia. He has assisted 150 multi-national firms
in their assessment of opportunities in Asia and their resultant
business strategy development.
In part three of a three-part
Q&A, Ganster sat down with international expert Michael Muth to
discuss what makes a company ready to approach the Chinese market.
Michael Muth: How do you
assess whether or not a company is ready to approach the Chinese
market? What is a “China-ready company”?
First of all, what’s their motivation to go to China? While a company’s
motivation may seem obvious on the surface, many companies pursue China
without clearly understanding their motivation at a deeper level.
If you are going to reduce cost,
have you validated that you will get the cost reduction you need in
China? If you’re going to follow your customer base to China, will the
customer still be there when you get there? What happens if you don’t
go? Companies need to understand these issues in detail.
We then determine the company’s
organizational preparedness to deal with the challenges China will
present. A company must have the right profile in terms of their
operation, management team and financial resources. Virtually every
company will have some shortfalls here. Understanding what they are in
advance will better prepare a company to face the many challenges China
MM commentary: You’ve got to be able to manage your resources well before you can think about investing significant resources in China.
MM: How were you able to help Midwestern companies like Abbott, Dow, Emerson Electric, GATX, General Motors and Sara Lee?
the 1990s, our work with these companies was oriented to market-entry
investigation and strategy. Being on the ground in China, we helped
them understand the markets and their opportunities to play in them. We
also worked with them on their entry strategies, which included a lot
of work in alliances and acquisitions.
While we do similar work today,
it’s more oriented toward market expansion and growth off the bases
they established in the 1990s and early 2000s. We continue to address
key marketing issues like segmentation, distribution, brand building,
partner identification and qualification.
An increasing focus for us today
is on mid-sized companies that comprise the second wave of investment
in China. In addition to going after local China market opportunities,
these companies are coming to China specifically to serve their U.S.
customer base that has migrated there.
MM: How do you assist companies with sourcing in China?
help companies as they move from opportunistic sourcing (e.g. through a
trader or sourcing company) to strategic sourcing where they need to
invest in their own resources in China.
We see many companies that are
in this transition. China sourcing is becoming a bigger issue to many
companies. Maybe half of their product is now made outside the U.S. It
then becomes a strategic issue. They need to control their sourcing
activity more directly. As a result, they need to more strategically
think through their structure and approach.
MM: Will you be assisting Chinese companies in coming to America?
Though we haven’t yet, we are looking at that. Our concern is just
getting paid for it. We see many Chinese companies facing the task of
globalization. We hope to start to work with some of them in the near
future. We can bring a good view to them.
MM commentary: Watch out. They’re coming.
MM: What’s the success of your online China readiness assessment?
China readiness assessment is primarily an interactive workshop
process. It has been very successful and we continue to adapt it to
China’s changing environment. We recently developed an online version of this more comprehensive approach that offers a simple first step in the process.
MM: Who’s clicking on your podcasts and blogs?
While I was skeptical in the beginning about the quality of the clicks
we get, a client of ours who attended one of our workshops complimented
us on a recent podcast. That told me we need to pay attention to
podcasts as a marketing tool.
MM: How do costs for your services compare to market research firms and management consultants?
tend to fall in between a market research firm and a more general
management consultancy. We get our hands dirty out in the marketplace
and we also provide a lot of insight and analysis to help companies do
something with the information.
MM commentary: Because they’re small and don’t have a lot of overhead, they’re quite competitive.
MM: How did SARS affect your business a few years ago?
SARS shut our business down for a few months. We weren’t able to do
field work or visit clients. It was very rocky for a few months. We
used the time to come up with a special multi-client program in the
auto industry aftermarket in China. It turned out to be a huge success.
MM: What’s the difference between doing business in Shanghai and in Beijing?
Beijing is the political center of China while Shanghai is the
commercial center. Shanghai is more strategically located in the
geographic center, too. Economically and culturally, it’s more
competition than conflict in that context.
MM commentary: I’d liken them to New York versus Washington, D.C.
MM: How did your education prepare you for your experience in China?
went to Vassar College for my undergraduate degree. I was in the first
full male class at Vassar. That was probably my first cultural shock.
It was in the early 1970s when China was just opening up. I wanted to
study Chinese, but because the program didn’t fit with my major, I
studied Japanese instead.
That started my interest in
Asia. My boss in my first job after college went to Thunderbird. He was
my mentor on the international side. After working for a few years, I
went back to Thunderbird and continued in Japanese.
Thunderbird had a significant percentage of students before Sept. 11,
2001. Because of visa restrictions, that percentage has dropped
MM: How were you able to work in China before it opened up?
set up a joint venture in 1985 in Guangzhou as a facade to get access
from Hong Kong. Our partner was able to connect us locally. We
established our own direct office in the early 1990s. Until China
opened up in the early 1990s, there wasn’t much consulting business to
be had. It then took off like the gold rush in the Yukon Territories.
MM commentary: That’s one of the advantages of establishing yourself early and growing with the market.
MM: Where else have you worked?
lived in Singapore for six years and I’ve traveled and worked
throughout Asia. I started to focus on China in the mid- to late-1990s
after the financial crisis in Southeast Asia. Much of my foreign
interest focused on China after that. Though I worked in Latin America
in the 1980s, my passion is Asia.
MM: What other languages do you speak?
Mandarin is enough to get around in taxis. Though I have people around
me in Shanghai who are locals, my role isn’t to speak Chinese. Even if
I go to a meeting, I don’t need it in my business role. Logistically,
though, it would be helpful and even enjoyable.
MM commentary: While
it’s kind of surprising and disappointing that language isn’t that
relevant here, Chinese is a laborious language to learn.
MM: How do you overcome the barrier that you’re not one of them?
hasn’t been an obstacle because it has never been a goal. We’re clear
who we are and what roles we play as foreigners. Our value as a firm is
providing a combined east/west perspective. We provide local street
smarts with a deep understanding of western management business needs.
Our team looks to me to help them understand the west.
MM commentary: I’ve run into this problem when I was in Europe where we look like they do. If it were a goal, it would be even tougher there.
MM: What brings you back to Chicago?
Several reasons (mostly for business development). We’re targeting
small- to mid-sized firms. We can’t reach them from China.
Logistically, there is no better place to be than Chicago.
MM: Where were you during the Tiananmen Square protests?
was in Chicago then but my partner was there. Our business was pretty
much stopped across the country. Because we weren’t very big then, the
impact wasn’t as significant. Our business exploded a few years later.
MM commentary: The proletariat rising up against the bourgeoisie is still a significant political risk in China.
Michael Muth is managing director of GATA,
an international business development consultancy that helps technology
companies build international partnerships. He can be reached at firstname.lastname@example.org.
Click here for Muth’s full biography.
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