Today we’re going to have a bit of a review.

When a Chinese person – particularly a YOUNG Chinese MALE – says the phrase “I know”, it can have many, many meanings. Unfortunately, “I actually know how to accomplish the task I am referring to” is NOT ONE OF THEM. Or it may be, but it falls into the “anything is possible” category of statements.

Today’s point is that “I know” should, in general, be taken as a contra-indicator, along the lines of: “This won’t hurt“, “Trust me“, and “Of course I really love you”. There are times when these statements are actually genuine, but usually they mean just the opposite, and you should be very, very worried when they are said to you.

Is there an interesting and long-winded sociological explanation for this”I Know” phenomenon? Probably. Does it matter to you as a manager? Nope. Not at all. That’s the main point of this article. Understanding WHY people need to pretend that they know things that they clearly don’t is of no use to you whatsoever — so don’t waste time, energy and social capital trying to figure it out.

When confronted with “I Know”, you have only 3 priorities:

• Determining the approximate gap between the Knower’s actual knowledge and the level of skill he will require to do something useful for you or your company.
• Figuring out an effective method for teaching the Knower what he needs to know.
• Preventing disaster. (If you can’t tell already, I was just “I knowed” out of a lot of money.)

1) Determining the gap in knowledge is a tough one, and in most cases you can assume that the gap is somewhat more than total. In other words, the Knower will not only have to be taught to do the job from scratch, but must be UNtaught things that are wrong, damaging or dangerous. (See step 3). Failure to properly understand this point will result in psychological impairment and severe emotional damage (to you).

2) Effective methods for training aren’t really that hard to figure out. The worst part is getting the Knower to understand: A) he doesn’t really know; B) you KNOW he doesn’t know, and C) THERE IS NO SPECIAL CHINESE METHOD FOR DOING THIS. If you are cooking Chinese food, writing Chinese characters or paying off a corrupt official, there is probably a special Chinese method. But for most business activities that you are involved in, there is unlikely to actually be any “Special Chinese Method” (here-after referred to as SCM).

With the exception of this weird quirk of pretending to know everything, the person you are dealing with is probably quite intelligent. A good general rule for training in China is to be very clear on goals, break down the task into component parts or steps, and give clear examples. One difference between training in China and in the West is the lack of feedback from the trainee. Don’t assume they’ve “gotten it” just because they don’t articulate what part of the new task they don’t understand. Manage the person a little more closely than you would back home after they start a new task to insure that they are doing things properly. Don’t take anything for granted.

3) Preventing Disaster begins by knowing when disaster is about to strike. In retrospect, it is really quite clear. Benefit now, my friends, from the clarity that I have just paid so very dearly for:

When a young Chinese male say’s, “there’s a special Chinese method” and you say, “Hold on. I’ll to talk to you about that in a minute”, you are in actuality, swinging wide the gates of Hell itself. Nothing motivates an eager young intern to speedy action like that brief window of opportunity to put an SCM into effect. Faster than you can say, “who the hell told you to do that?”, your project will be cast into the abyss in the most expensive and publicly humiliating way imaginable.

Never, EVER leave an opening after hearing, “I know a special Chinese method”. It’s like a lit cigarette in a trashcan. Maybe it won’t burn down the orphanage – but you’d be a negligent fool to take the chance.

You have been warned.

Time for a new approach to Training and Development in China?

ChinaSolved

I just came from a meeting with a senior European manager who runs a sales department made up of expats and locals, here in Shanghai. In the past when we discussed sales training solutions, we had split them into separate groups, even though his Chinese staff all speak reasonable English. This year, however, we are combining them into one group with the same curriculum. Why the change? (No, it wasn’t budget. It will work out to be MORE expensive for them, not less.) There are two reasons:

1) Team building. The time has come to build a single team with common skills and consistent training.
2) The market is changing and getting more sophisticated. Many businesses are already seeing the market to be growing more international and less “Chinese or Western”. In this particular case, Chinese sales representatives are selling to western clients who expect the same level of service that they receive in other markets. Both Western and Chinese representatives are servicing Chinese clients who are feeling increase pressure from the marketplace – and are in turn placing greater demands on their suppliers.

Do cultural differences still exist? Of course. A new trend is for multinational organizations to push the management of cultural issues down to transactional level, where before it was strategic. In other words, companies don’t necessarily restructure their sales teams along cultural lines anymore – they expect the individual sales professional or team to react to the different needs of each client. That requires more training for the sale staff, but yields a stronger, more integrated international team.

It also reflects changes in the marketplace. The top of the market is pulling away from the pack in terms of operations and procedures. For a while we were seeing top-tier products being hawked like fish in the marketplace. Now that MNCs and large Chinese organizations are focusing on profits and expansion, there is more attention being paid to procedures and best practices. The changes are most evident in MNCs where returnees or local MBAs are running departments and taking responsibility for bottom line profitability as their companies expand and open new branches. But more significant may be the shifting attitudes in local companies. We simply aren’t hearing about “Chinese methods” as much as we used to just a few years ago – at least in Shanghai.

Competition for the top of the market isn’t about lowest price – it’s about greatest value. Companies must be able to approach their best clients and key accounts with an integrated approach that includes both Chinese and Western resources who have a common skills-base. The good news is that clients are showing a greater willingness to pay international prices. The challenge is that they expect international levels of service from teams that understand the local realities. Managers who want to compete at the top of the market need to re-examine their training strategies to make sure that they remain competitive.

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Sales and Marketing into China

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There are two major categories of challenges for managers in China’s hyper-competitive markets. HR is one, and Marketing is the other.

Marketing is one of the least understood aspects of business in China. Consumerism is new, brands aren’t firmly entrenched, and the relative youth of the market makes trends and fads an important factor. Even in more developed economies, marketing is a gray area at best, having more to in common with pagan alchemy than any actual science or skill. Yet none of this stops the self appointed experts and overpaid pundits from spouting off as though they really knew what they were talking about. Today is ChinaSolved’s turn.

SO… with no further ado… We are proud to present the List of Lists, the Keys to the Middle Kingdom, the First, Last, Best and Only article you will ever need on the subject of success and profits and happiness in the 21st century:

1) Train, train and retrain.
If you are too busy to train your sales and marketing people, then let us to be the first to offer you a hearty “Congratulations!”. Pat yourself on the back for doing such a fine job of managing and promoting. You are truly blessed with unusual skill and talent, and the days in front of you will be full of sunshine and roses and goodness!

Ok, done yet? Great. Because if you are not training your Chinese sales and marketing staff then you are heading for disaster so fast you won’t have time to notice that the abyss is about to swallow you.

Just because your people look busy doesn’t mean that they are doing anything useful.
Just because business is coming in doesn’t mean that your people are bringing it in.
If your staff is good, they will get poached or jump the fence on their own. If your staff is lousy, they will drive away the best customers and leave you with the dregs, bottom-feeders and deadbeats.

Your only hope is to 1) Train your staff to a consistent level of competence so that no one sales or marketing person controls an unhealthy chunk of your business, and 2) Develop a feedback system that will tell you where the business is going and where your profits are really coming from.

I am always getting desperate calls from people who once told me that they have no time to train or organize but have recently been forced to slash prices and have already lost their best customers. Now they have plenty of time – but no budget. Sounds funny when it is happening to someone else, don’t it?

2) Beware competition.
They may take a small bite out of you, or they may gobble you up whole – but they are out there and looking for YOU. This is especially important to consumer brands that have spent a lot of money to educate and build markets. Step back from and refresh your view of the landscape. Don’t ever stop doing competitive analysis or market analysis. That doesn’t just cover new markets or product groups – constantly scan the environment to determine how things have shifted in the last 3 months…because they probably have.

You are probably nodding your head right now — agreeing that this is very important for other people. When is the last time you did a SYSTEMATIC audit of your market and competitors? (No—glancing at the advertisements in the China Daily doesn’t count as competitive analysis. Sorry.)

3) Play the numbers game and cast your nets wide.
Chinese buyers – particularly B2B and industrial clients – have a tendency to be overly optimistic and encouraging at the beginning of a sales relationship. This doesn’t mean that the deal is a lock. Complacency kills, so avoid confining yourself to a small group of potential customers – no matter how encouraging initial signs may be.

Chinese are always warning westerners that relationships take time. Well, you must learn to use that to your advantage. Every time you open a new account or speak with a new prospect, immediately start marketing to his competition and up and down his supply chain. This is accomplishes two useful things – 1) it helps you build up industry expertise and a reputation within a specific business circle, and 2) insures that you have a steady supply of potential customers.

4) Try not to get bogged down with any one potential customer early in the sales cycle.
Don’t allow one potential account to dominate all your time unless you have reason to think that it will be worthwhile.

Chinese buyers are famous for saying that they need a comprehensive proposal by tomorrow because they want to make a decision right away – thus sending your organization into a tailspin. Weeks or even months will go by without any progress.

This puts many sales teams in a quandary, because they don’t have a good way to move the process along. ChinaSolved solution – try to parse out the information you give to new prospects, or at least keep the sales process alive with a systematic stream of updates and value-added communication.

Always remember – Chinese organizations tend to treat initial inquiries with much more urgency than Western organizations. Don’t make the newcomer mistake of delivering a comprehensive proposal and then sitting by the phone waiting for the customer to respond. Develop new leads and pursue existing sales in a systematic fashion.

5) Don’t expect repeat business. Ask for it.
In the West, if you are able to fulfill a customer’s needs at the price you agreed to, you may expect that to lead to follow-on business. In China, the customer will look at you like you have two heads for asking for another order. The rationale seems to be that if you provided full value for the stated price, then the price was probably too high.

“Bottom line profitability” hasn’t really become second nature here yet. There appears to be a fear that buying from the same vendor twice in a row will somehow undermine the power and authority of the buyer. Purchasers seem to feel more pressure about pricing than about quality or results. The result is that they will spend lots of time looking for a better deal.

Part of the problem is that many Chinese salesmen don’t ask for repeat business because they are afraid that if they ever talk to the customer again he will demand his money back. There is no “follow-up” call to insure that the buyer is satisfied. If you are going to attack any single sales problem – this is a good one to start with.

For those interested in additional training material on Sales and Marketing for China – please see www.BestPracticesChina.com ( in English) or BestPracticesChina (in Chinese).

10 Rules for BoomTown PRC:

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If you learned about management in the US or European markets, you are accustomed to operating in an environment where customers are scarce but resources are plentiful. In China, however, customers are lining up but the tools you took for granted back home are few and far between. Welcome to the NEW cultural barrier in China – BoomTown PRC.

An American business owner in Shanghai recently called me late on a Friday night, asking me to come in to train his staff. Not really, train, but restructure his organization. Not really his staff, but his senior manager. Or the staff members who were supposed to be senior managers – or the senior managers who act like staff. Confused? So was I. And I suspect – so was he. (And in case you’re wondering, no he wasn’t calling from a bar or KTV. He was in a taxi, on his way home from another 60 hour work-week.) He has plenty of contracts– but can’t figure out how to execute his business AND nursemaid his staff. Sound familiar?

The challenge for many overseas managers as we settle into Boomtown PRC is sheer complacency. We’ve jumped from Socialist Entitlement to Spoiled Yuppies in one bone-jarring jolt. Your staff are as relaxed as rural farmers about starting work in the morning, but Type A anal when it comes to calculating overtime. How can a China-based manager deal? A few suggestions. (I kept it brief. Make time to read them.)

10 Rules for Dealing with the Chinese Boom:

1) Understand the difference between Market Need and Market Demand. Nothing destroys a new China business quite as fast as common sense. You are a lawyer. Your prospective Chinese client needs legal advice. Hence, he will doubtlessly want to retain you to give him legal advice and will then follow your suggestions. HA! Just because you know your prospective client needs your help doesn’t mean he knows or cares or has time to follow-through. Many service providers and marketers of high-end products have starved waiting for the market to catch up with them. Position your service or product as A) a time-saver for top managers, or B) a way to capture foreign investment / expat spending. The market doesn’t always want what the market needs.

2) Salaries and Costs will be far higher than what seems reasonable. The rule of supply and demand functions just beautifully when you are the buyer. This is particularly true of HR, consulting, real estate and high-end business services. You can still buy a plastic thermos in China cheaper than just about anywhere else — but try hiring someone to fill it. Actually, salaries at the low end of the scale are still cheap – but you get what you pay for. At the upper end of the pay scale, you may feel that you are getting far LESS than what you pay for. You can buy experience or build a well-trained team. Almost every other option will result in disaster.

3) Competence is only competence if it delivers on YOUR goals. It’s very common for people who are hired for one skill to spend all their time doing another. This is Chinese for “staff development”. Make sure you are not providing on-the-job-training for potential job-hoppers. Your staff is sure to look busy whenever you pop your head out of your office – just make sure that they are busy with things that contribute to your goals.

4) You have to ask the right questions – over and over. Old hands know this one. Newcomers still bang their heads against walls, so I’ll repeat one of the basic rules. NO ONE WILL TELL YOU ANYTHING YOU NEED TO KNOW UNLESS YOU ASK. Corollary: YOU HAVE TO ASK AT LEAST 3 DIFFERENT PEOPLE TO GET AN APPROXIMATION OF THE TRUTH. I’m not going to waste too much time on this, since you’re probably stressed out and late for 3 different meetings. If you don’t believe me, ask someone who has been here. (And NO – THE SITUATION HAS NOT GOTTEN BETTER).

5) The relationships, agreements and situations that you most need to be stable will be the first ones to change. Make sure you have agreements from people who will stay put and who have the power to execute those agreements. Contracts mean nothing. Structure deals that make sense now – avoid back-loaded or front-loaded agreements unless they are in your favor. Don’t use clouds as landmarks.

6) Don’t be a training center. I make it a habit to ask young Chinese workers what is most important to them when choosing a job and the typical answer is “Career Development”. The next question is when you will change jobs. Answer – when I have the skills to get a big raise and promotion. Do the math here. Tie career development to a SPECIFIC management development program. Don’t step into the “when you learn to do this skill you’ll be rewarded” mess. It doesn’t make sense to your staff, and it probably shouldn’t. Corporate training is “up-front” expensive, and on the job training is “back-end” expensive. Make sure you have a system for getting value out of your training budget.

7) Identify key assets, and figure out how to retain them. Your best staffers are the ones who will get the best offers. If you try to negotiate for them to stay when they already have a job offer in their hands, you will pay twice. Once for them, and then again for EVERYONE else who will figure out that the way to get a big raise is to head for the exits. Look at your staff and figure out who it would kill you to lose. Then sit down with them and tell them about the future. Include significant promotions and enough money that you give them an incentive to stay put.

8) Learn to wish for more wishes. Hire managers who can hire and train. Train senior managers to manage staff. I know that this sounds basic, but there is a tendency for ex-pat managers to hire under pressure. That means hiring on operational skills – not organizational skills. Many companies that call me in think their problems are in sales, marketing or administration, when the real bottleneck is in HR. If your mid-level managers aren’t training effectively, the mess will ultimately end up on your desk. Does your company have a T&D Specialist? Do you even know what a T&D Specialist is? (Training & Development. You’re welcome.)

9) Win-Win is relative. That “long-term” contract you just signed looks like it benefits both sides – thus insuring the other parties best efforts and cooperation, right? Maybe. Win-Win only works when both parties have sufficient resources. What if your counterparty has just struck another Win-Win deal that offers him substantially more return? In a booming market where contracts for services are not taken seriously, counterparties tend to prioritize their cooperation. In other words, your needs could end up getting put on the back-burner, win-win agreement or no. This is particularly important when the other party is asking for up-front money or deposits.

10) Common sense is neither. Read it. Learn it. Live it. Your notion of common sense is culturally specific. Example – Your company has just bought a new piece of industrial equipment for US$ 5,000,000. A 3-year service contract including maintenance is being offered for $100,000 – or 2% of the contract price. Without the service contract, there is a 50-50 chance that you will suffer financial loss of at least $1,000,000. What does common sense tell you? Take the contract. Why? It’s simple common sense.

Will your local counterpart take the contract? Probably not. Why? He will have to pay the money NOW, but he may not be here in a year when the company will benefit from it. And if the machine has a problem, his friend at the bicycle shop can probably fix it. And maybe it will never even have a problem.

Some of you think I’m joking. May heaven help you.

ChinaSolved

Booming Markets make everyone look like geniuses. Pass this article on to your friends who aren’t.

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In the 1951 classic film The African Queen, starring Humphrey Bogart and Katherine Hepburn, our man Humphrey gave China managers the key to successful management during the next phase of China’s growth.

Rose Sayer, played by Katherine Hepburn, asks why they need the engine when the river is carrying the boat in the direction they want to go. Charlie Allnut (Bogart) answers, “Because if we don’t go faster than the tide we won’t be able to steer and we’ll crash on the rocks.”

Hmm. Shanghai is a long way from the Alonga River, but the lesson works for us here as well.

It’s easy to sit back and just sort of enjoy the ride as the Chinese economy powers up demand and turns the sales process into a matter of filling orders and maintaining production. But managers still have to navigate the course, and that means keeping the engine running smooth and the tiller hand firm.

What are the rocks we can run up against?

Branding & Market Perception
Competition
Changes in Direction and Speed
HR

Brand Image: Will your customers still buy from you if a new supplier suddenly appeared? Do your clients feel that you are the best choice – or the “least worst”? Emerging markets make EVERYONE look smart – but the upswing doesn’t last forever. You have to know what has the potential to end the party for your particular product or service. New competition, changes in fashion, better service or prices somewhere else? You should be able to spot your own weaknesses, even if you aren’t prepared to do anything about it at this moment.

One of the things you can do is to gauge your own customer service and market perception. Check with your customers. Have a friend call your company’s front desk and ask for basic information. Send an email asking for a brochure or product description.

Are you easy to work with? Are your prices competitive? Are you friendly and competent? It’s not about slogans and brochures – it’s how your own customers perceive you. Find out now. When the market slows or changes, it will be too late to try to adjust your image with customers.

Competition: You’ve got three kinds of competitors in China – Direct Competitors, Substitutes and Potential Competitors. You should know who your direct competitors are, and have a strategy for dealing with them through a combination of lower cost and better service. Substitutes are a little trickier, and have a lot to do with local tastes, technology and trends. You need to have a good handle on your market and the habits of your customers to foresee the entire range of potential substitutes for your product or service. It is a relatively simple matter to know who your potential competitors are going to be: EVERYONE in the world. Every successful company anywhere in the world has some kind of China plan. If someone is selling well in NY, London or Moscow, they will eventually show up in Shanghai and Beijing.

The market may be running hot for you, but it is also hot for your competition. If you can’t build your market-share during the boom, then you probably won’t have much more luck during a correction. This is the time to test your new products and strategies. Successes can be copied, and failures can be discreetly discarded before they attract too much attention.

Changes in the intensity or direction of market growth: Just because the headline numbers say that economic growth is strong doesn’t necessarily mean that it is good for your product or service. Emerging market managers are notorious for believing their own pitches – and that their success in a bull market is due to their own genius. But think about your own supply-chain situation – you probably have suppliers that you plan on dropping when your situation changes or you have more time. Are you someone else’s bottle-neck or second-best option?

If you sell overseas, are you 100% up to international standards, or “good enough compared to the competition at this price level”? If you’re just “good enough”, are you making plans to get better – or are you planning on the market staying hot forever? One can happen – the other almost certainly will NOT.

Is the market moving towards you? If you sell an overseas brand into the Chinese market, are you planning on your customers becoming more international and learning to do things “the way they do it back home”? That may not be happening. Just because markets develop and change doesn’t mean that they will change in a way that benefits you. Even if the economy stays hot in your sector, it doesn’t always mean that your market situation will improve.

HR: Nothing works like success – and your company’s success is going to make your staff and managers appear to be working. Nothing can wreck your well-laid plans like a competitor’s raiding party. Not only does he benefit from your marketing and training efforts, but you are left with the expense and risk of rebuilding a new staff. As we’ve pointed out many times, competition over HR assets is going to get fiercer in the next few years. Have a plan for holding on to your best people. (And just in case you were wondering, waiting until some quits to offer them just enough to get them to hang around for another few months is NOT really a plan).

Having a good plan and a tuned engine is more important when the river is running fast. If you want to navigate you need to know where the rocks are and what’s beyond the next bend in the river. You also need a good firm hand. The faster the waters, the easier it is to run into trouble.

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Where to Local Chinese firms figure in the competitive landscape?

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Multinationals have returned to China after a brief 3 generation hiatus, and have picked up pretty much where the left of in the 1920s – at least in Shanghai and the other big cities. But what about local companies? How are they going to figure into the competitive landscape?

Well, the politically correct line is “they are already developing into major competitors and western companies are going to have to really look out or the Chinese multinationals are going to not only retake the China market but dominate the US and Europe…”. Yes, we’ve all said it – often with a straight face – and we will probably have occasion to say it again in the near future.

Let’s do a quick threat assessment on Chinese companies, and what they REALLY mean to you:

HR: Significant threat. They have the resources to hire away your better assets, and may be able to offer them things that you can’t. They have started matching international salaries, and the HR market is one place where the culture card counts for a lot. MNCs are going to continue paying a premium – and will have to get into the habit of promoting more among middle & upper middle level managers.

Brands & Markets: Nah. Someone had to say it. It’s just not happening. Economic trends are working against the local brands both at home and abroad. Cherry can put out all the press releases it wants about storming the US auto market in 2008, but there’s only so far you can go with a cheap SUV. The challenge of selling into the developed markets isn’t price – its value. Things aren’t looking all that much brighter at home. Chinese companies have had 20 years to build strong brands on their home court but the pickings are still pretty slim. Now that the MNCs are starting to fire on all cylinders at the same time that middle-class purchasing power is spilling into the second cities and suburbs, Chinese brandlings are going to have a hard time competing. Chinese yuppies like Nike. Ipods. KFC. Everyone knows this.

The market is big enough to support a lot of “just ok” local brands, and there will continue to be a steady stream of headline grabbing success stories. But international managers in China should be more worried about losing their best people than losing their best customers. Chinese competitors look like they will continue being niche players and low-cost opportunists for a while yet.

How will this break down on an industry basis?

Big manufacturing companies. That would be Haier, TCL and Huawei…still. Yeah. And Lenova-IBM. Right. Nice companies. But they are few and far between, and haven’t built the brands or critical mass that they need to hold their own at home or abroad. We’ve been talking about the same names for 10 years now. Thos reverse take-overs (ie: IBM) we all love reading about are still unproven. Let’s see some more IBM./Lenova notebooks at Starbucks around town before we start calling it a successful model. All in all, the big local firepower is in industrial and B2B, and they tend to compete on cost. The best years are probably already behind a big chunk of China’s industrial sector.

Big service companies. That would be the internet. Alibaba, Baidu, Shanda, Sina.com. The internet is growing nicely, and this is one area were the locals really do have the cultural advantage. Their market tends to be 18 – 26 year old gamer-geeks, which is how the internet started back in the US, too (yes – I’m old enough to remember). Chinese companies definitely have the eyeballs — but now they have to figure out how to monetize the business. Still, it looks like a very promising sector. In the late 90s western new-media learned that B2B is where the money is, and that’s where the battle will be as those smoking game-boys get real jobs and start using the web for more than entertainment. International media and hi-tech companies will compete, co-opt, or try to buy in. This sector will be a real slugfest for the foreseeable future, and if China is really going to emerge a world class competitive power it might be in new media.

Little service companies. Exciting stuff happening – mostly in the online sector. Entrepreneurs are just figuring out how to talk to bankers, and you can expect to see lots and lots of action in this sector. But the lion’s share of these start-ups are going to fizzle under the enormous pressure of over-eager VCs, and the survivors are going to get picked up by larger companies – probably international hi-techs or MNCs. Expect to see more and more of your bright young managers bail on you to start up their own shops. Get a management book from the 1990s, and look up the work “extrapreneur” – you may be able to work out some interesting deals to capitalize on China’s coming start-up boom.

ChinaSolved

Hyper Competition in China HR — Time to try the “Star System”

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The big MNCs are already here in China, and they will be ramping up their operations (and HR requirements) exponentially as they focus on regional and national expansion. They aren’t looking to add one or two outlets a year – they will be adding 10 and 20 and 30. Small and medium-sized service companies have gotten the message that the regulatory and infrastructure landscape is now appropriate for them in the big cities. The Shanghai and Beijing markets are already swarming with small expat service companies expanding into China or setting up their first shop here. A few major Chinese players are emerging, along with a host of other regional and hybrid operations of every conceivable shape, size and business plan.

What do all of these players have in common? They are all insatiable consumers of high-quality management and marketing HR. They have already learned from your mistakes, and now are ready to benefit from your hard work and expensive training & development efforts. Your best HR talents are in play, whether you know it or not.

Is Consensus management working for your China operation?

Time to take a look at your basic HR assumptions, and view them through the lens of hyper-competition. Up until now, we have all told ourselves that a consensus management style at the lower levels of the company would gradually yield a coterie of highly trained local managers who could take more and more operational and tactical control of the company, and eventually develop into top strategic managers. It sounded so nice and soft and painless. Well, Sorry Charlie. It aint happening now, and it doesn’t look like you have time to make it work. Every time one of your local managers displays the slightest bit of initiative or talent – or can stay at one job for more than 6 months – he gets snapped up by competitors desperate to establish new operations or expand old ones. As one HR manager put it – “I do 3 times as many exit interviews as annual appraisals”.

The Star System

What will happen next? Look for new players to bring the Star System to China. This is how it works in a typical sales department — You throw the beasts into the pit and see who comes out on top. He’s the king. Give him everything he has ever wanted. Make him into a living god. Throw riches and gold and virgins and Porsches and the finest of everything at him – as long as he is still the best. All the others will fight until they can tear the throat out of his neck and take his place. The weak have no place in this world (although there will be many fine positions available in Wuhan, Nanjing and yes, Tsingdao). Charles Darwin meets Zig Ziglar.

Ok, maybe that’s a little harsh. But the point is that consensus style HR management won’t work in the coming competitive storm. You need to identify your best human assets and make them a stable part of your business plan. That means paying until it hurts. It also means treating them so well that no sane HR manager will match their compensation package. It’s not just about money (though money is nice), but also about recognition, respect, and yes, POWER. Make your stars the envy of the entire department. (Look at it this way – if you have to give one guy a big raise to hold on to a key player when he already has one foot out the door, it encourages your whole team to look for new jobs. If you give one guy a huge raise and a promotion for good performance, it may encourage your whole team to perform.) Pre-empt the competition, or at least bleed them dry when they try to raid your team.

Will local workers accept it? The guy getting 50,000 rmb a month will accept it just fine, xie xie ni. The question is, will his colleague in the next cubicle settle for 5,000 a month while his classmate is shopping for the new Benz? The cold hard truth is that it’s not really your problem. It’s about the numbers. If you are working on an 80-20 rule where 20% of your managers and salespeople are bringing in 80% of your revenue, then you need to worry about holding on to your big earners and heavy lifters. (NOTE: If you can’t name your 5 most valuable people right now, you had better make that a MAJOR priority.)

I know, I know – it’s not the Chinese style of management. Well, look at it this way. In a nation of 1.3 billion people, you only need about 2 dozen bright, ambitious young salesmen who “get it” to crush the competition. Stop trying to please everyone all the time and find a way to identify and retain your stars. That’s what will make you a success.

ChinaSolved

Looks like this China-thing is gonna be BIG!

ChinaSolved.com

The headline numbers on China-based MNCs (multinational corporations) are working their way through the media, and it seems that China is a hit. MNCs are earning more in China than they are anywhere else. Hooray. Top brass are basking, but line managers here in the Mainland are feeling the heat. Life in Shanghai and Beijing is about to go from the frying pan to the fire. As we enter a new hyper-competitive mode, the challenges will change and your responses have to shift with them.

Take a look at the MNCs’ history in China:

Phase 1 was the set-up period. Everyone was dealing with regulations, infrastructure and staffing issues. Goals were to get an operation on the ground and functioning. Expat managers who didn’t really want to be here were paid LOTS of money for 2 – 3 year stints to oversee the heavy lifting.

Phase 2 was about operations. Large companies were training, developing distribution networks and optimizing their HQs and flagship operations in Shanghai, Beijing and Shenzhen. Lots of small and medium sized expats and JVs sprung up around the big MNCs to support them and provide services. Senior expats and overseas boards experimented with localization of management systems and product lines. The marketing efforts worked – the HR efforts were less effective. MNCs started making profits in the big cities. The timing on that is different for everyone, but just for the sake of argument, let’s say that Phase 2 ended, I dunno, how about YESTERDAY.

Phase 3: Resistance is Futile. Now the MNC model really kicks in.
Giant engines of commerce are built for expansion, and now that top managers have a working China strategy, the job is to roll it out all over China. You will be expected to tweek the model and then execute it over and over again. Some will leapfrog from large city to large city (ChongQing is a good starting point), while others will roll westward from their base. Whatever way your outfit does it, you have to get ready to ramp up your plan and execute.

We are on the cusp of Phase 3, and life is about to get really competitive.
What should you expect on a day-to-day operational level?

1) Competition – This time it’s Professional.
2) HR – Forget about filling seats. It’s about finding and holding on to Stars.
3) Growth – It’s only good if you can manage it. Can you?

Competition – We’ve all been talking about how competitive a market China is, but until now it has meant different things to different people. One thing you can expect is that multinational brands will be competing with one another for market share among the Chinese consumers. I know that we already say we do that, but up until now the real emphasis has been on internal systems and growth plans. Now that we understand consumption and spending patterns in China, we will see the giant marketing machines really go at each other. It’s gonna get old school up in this piece. (Ok, sorry. I won’t do that again. Sorry.)

How do service companies compete with one another? Marketing and HR. China is about to become a spend-fest that will make the last 5 years seem like penny-pinching. But this time, someone is going to be looking over your shoulder to make sure that there are real, bottom-line results.

Continuing…