ChinaSolved

In the last week, I’ve encountered 3 separate instances where Chinese sales professionals at foreign invested companies are being paid considerable salaries to manage waiting lists.

It seems like a great problem to have. One is a school, one is luxury apartment building, and the last is at a training company. In each case, the overseas company is operating slightly ABOVE its stated maximum capacity and is already well on the way to adding new facilities and staff. The bottlenecks seem temporary, and 2006 should be a record-setting year for them – if they can continue to deliver high quality service and maintain strong sales.

This reinforces ChinaSolved’s approach to managing in China. Two major challenges for expat businesses in this market are managing growth and dealing with HR needs.

What can go wrong with this rosy scenario? Since only marketing people get paid for always seeing the bright side, let’s discuss what the expat managers at these places should be on the look-out for.

One issue is HR. Those salespeople who are managing waiting lists are a double threat. On the one hand, there are not actually doing sales, but rather doing PR. They are not really building the skills you will need when that new facility comes on line. In the cases of the school and the luxury residence, capacity is going to double overnight. If those expat managers expect their sales team to adjust to the new demands right away, they had better develop some kind of plan that includes training and compensation. I know that in at least one of those cases, the local salesperson has never actually completed a transaction that wasn’t “pre-sold”. Is your team ready for the next phase of the company’s development?

Another HR concern is poaching. No expat manager likes the idea of giving raises, bonuses or promotions to salespeople who aren’t actually selling, but these folks look like superstars to the outside world. A new competitor will try to steal them away. Notice I didn’t say “might try” or “could conceivably think about trying”. Competitors will make offers, and since it is natural to believe that these salespeople are at least in-part responsible for the companies’ great performances, the offers will probably be substantial. Are your salespeople bored? Do THEY feel they are underpaid? Do you have any kind of system in place for them to develop their skills, earn commission or bonus in other areas, or keep them engaged and satisfied in some other way? (HINT: If you don’t know, then there’s a really good chance they are feeling neglected, underpaid and bored. Find out.)

The other issue has to do with Marketing and Sales. Schools and buildings don’t add 10% to capacity. They add 100% or 150%, or 300%. Service companies move to new facilities or open new branches that double or triple their capabilities. If your company is the only one making such a move in a growing market, then you will benefit. But if everyone is doing the same thing at the same time, then you will notice 2 effects fairly quickly: Your fixed costs and staff needs are going to go up quickly while your sales rise slowly. And that is how bubbles burst.

Managing growth in China is about HR and Marketing. Make sure you have the human resources to help you execute your growth plans, or your rosy projections for 2006 may get very thorny fast.

Get back to work.

ChinaSolved

This entry was posted on Monday, February 27th, 2006 at 4:37 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.