The triple-A strategy for Chinese success

A blueprint to find a more-nimble approach to position yourself as a trusted partner of China

PUBLISHED : Friday, 12 August, 2016, 6:19pm
UPDATED : Friday, 12 August, 2016, 9:52pm

Managers of multinational companies operating in China have long been lured by the China dream: billions of potential customers.

Old hands know the challenges are myriad. What worked in other markets didn’t necessarily work in China. It has also taken multinational executives some time to shake off a naive idea of seeing China as a constant haven immune to world economic downturns.

While this experience has jaded some, our view at Accenture is that within the next decade we expect a new era to unfold: This is a championship game for competiveness, with foreign multinationals, Chinese multinationals and state-owned enterprises, as well as local smaller companies all playing in the same field, chasing the same customers.

It will be an open playing field with a lot of upsides. There are millions of new customers in tier three and four cities, gross domestic product is still growing, and the regulatory environment is showing signs of favouring business with more robust IP protection and trade dispute settlements.

The aim should be common prosperity – for Chinese and foreign multinationals. Keep that as the end game goal and you’re on the right track

Multinationals aiming to compete in this new world order should highlight their perceived strengths, such as the ability to innovate and their operational excellence and productivity, but they should also expect local rivals (especially in the hi-tech and consumer markets) to genuinely challenge them. They had best invest and keep pace with digital offerings given the culturally and commercially complex market.

The business world favours clear strategies, rapid actions and measurable results. So follow the triple-A rule.

Be agile: You can be more agile if you leverage digital solutions. Banks should focus on mobile apps and offerings that don’t require brick and mortar outlets. Similarly consumer goods/retail providers need to be online with speedy delivery and intuitive payment solutions. The country is simply too big to win market share unless you’re digital.

Be adaptive: Offer your international experience to local consumers but also consider marriages in China. For example, Cisco announced it will create a US$100 million joint venture with Chinese information technology firm and server manufacturer Inspur Group to make and sell networking and cloud computing products that fits specific customer needs in China. Similar joint ventures and joint R&D announcements between other Chinese and US hi-tech companies mushroomed during President Xi Jinping’s recent state visit to Washington. Joining forces is the way forward.

Be aligned: If you don’t marry, be sure to align. Aligning business interest with local stakeholders’ in a win-win framework is essential. Multinationals are no strangers to corporate citizenship and social responsibilities, but they should think beyond the traditional wisdom of providing local employment, monetary donations and social investments for rural regions and less privileged people. That means aligning with other businesses in ways that have more commercial implications and that incur direct business impact.

Managers of multinationals who wish to succeed in the new China must find a more nimble approach to position themselves as a trusted partner of China, with real commitment and pragmatisms that fits into their growth agenda. For example, Dell will not only invest US$125 billion over the next five years in China, but also collaborate with the Chinese Academy of Sciences to set up an “Artificial Intelligence and Advanced Computing Joint-Lab.” This is a way of expanding its own research and development team in the country to focus on technologies aimed at specific requirements in the Chinese market.

The aim should be common prosperity – for Chinese and foreign multinationals. Keep that as the end game goal and you’re on the right track.

Leo Ng is the head of the Hong Kong office and director of greater China operations at Accenture