China - based organizations are very dynamic. Teams grow, staff changes, markets open, people join, others leave, some get promoted – others don’t. If you have responsibility for running a sales, marketing or customer service team in China, you would be well advised to make sure you have multiple sources of information about your internal business.

Chinese managers tend to “spin” and control information flows more than others. Some Chinese managers still consider it patriotic to undermine the western boss’ authority and goal system. We all like to tell ourselves that this problem is behind us, but it is still very much a part of the Chinese business landscape. Unless you are particularly fond of putting out fires, you may want to develop multiple sources of information about key operations and departments.

If all your vital information is coming from a single source (such as your sales manager), you are putting your organization at risk. You’ll eventually learn the real situation about what’s happening at your company, but it may be too late. I know of an ex-pat manager who didn’t find out that his company was being raided by the competition until his entire sales team didn’t show up for work one Monday morning. The chief architect of this mass defection was the sales manager – who had free rein over the department for 6 months.

1) Multiple channels of information. Reports, budgets, meetings and personal contacts within your own organization.
2) Get to know ALL new hires. If language is an issue, make sure a trusted high-level department head is maintaining contact.
3) Encourage your finance people to maintain a healthy distance from your sales and marketing teams. A friendly work atmosphere is great, but when you financial controller and your sales manager are too cozy you lose an important oversight tool.
4) Make sure you have regular contact with key accounts, suppliers and consultants. Your consultants and BPOs (business process outsourcers) are a great source of information about what is really happening in your company.
5) HR plays a central information and reporting role. Don’t ignore the HR department. First – you want to balance hiring and promotion between internal sources and outsiders. Don’t allow your sales or marketing manager to make all the promotion or hiring decisions for his team. That’s a sure-fire recipe for disaster. Your HR manager should also be conducting regular staff appraisals and exit-interviews. Make sure you are getting your HR manager’s impressions – and taking a look at the raw data wouldn’t hurt either!

Remember – Chinese staff members will be less forthcoming and proactive than their western counterparts. Don’t assume that your staff will alert you to problems or trends in the market. It’s your responsibility to dig for information – and confirm it. Don’t wait for the building to burn to the ground to find out that everyone else has been smelling smoke for months.

If you have responsibility for running your company’s retail operation in China, you may want to review customer service procedures with you supervisors and managers. Many Chinese managers don’t put in enough time on the sales-floor where customers and salesmen interact. They feel that this is a low-status function that is either beneath their “pay grade” or low-priority. The result is often shoddy customer service.

Not sure if this situation applies to you? Try sending in a “secret shopper”. Have a friend, associate or colleague (that is unknown to your staff) come in and pose as a typical customer. Be on the lookout for staff that ignore the client, seem preoccupied with minor chores, or act unprofessionally.

You should try this method with a westerner, a non-Chinese Asian, and a local Chinese “customer”. Is everyone getting the same treatment? Ideally, your customer service is running at a uniformly high level – but many local Chinese customers complain that westerners are treated better.

When adjusting this situation, stress to your supervisors and staff that the solution is to RAISE the quality of service for locals – not lower the level of service for everyone else!

This kind of QC test should be done regularly, with consistent follow-up. As the level of competition intensifies in China business, so does the need to deliver outstanding customer service.

Chinese HR managers and sales managers have to face facts – The best people on your team are planning to quit right now.

If they are new, they want to change companies. If they have experience, they want to start their own company or join a competitor at a higher level.

You know. I know it. They know it. Everyone knows it.

Since you know that your best people are planning on leaving you, plan accordingly.

There are 3 major problems associated with high employee turnover in China:

Expense of hiring & training
Loss of “institutional knowledge”
Loss of clients

How can we minimize these problems as we expand our China business?

1) Groups & teamwork
2) Project-based assignments
3) Improved transparency
4) Bribery (bonuses and commission plans)

1) No more fiefdoms (or in China, maybe we should say no more little empires).
Organize your sales force into structured teams. Team leaders are trusted, experienced and committed to the system.

The teams should ideally be made up of a senior salesperson, a younger salesperson, customer service representative and, if appropriate, a technical person. In addition to providing clients with better service, this will also give your younger team members valuable training and help develop leadership skills among your experienced staff.

Now if one member of your team leaves, you will still have contact with the clients and people on your staff who are able to keep the business relationship alive.

2) Structure your teams around specific projects that last from 1 – 6 months.
Start organizing your company around project-based assignments.

Instead of entrusting your company’s institutional knowledge to one or two staff member who may leave at any moment, you can break up your strategic goals into discrete projects that have specific goals and milestones. Require your key managers to report on their project results at regularly scheduled intervals.
Sometimes known as “chunking”, this can help a Chinese company create a “knowledge bank”.

If a team member jumps ship you still get long-term benefits from their effort.

3) No more secret deals, confidential client lists or private projects.
If they want to get paid for the work they do, your staffers and managers have to declare all pertinent details. (I’ve heard western managers in China say that their key salesmen refuse to share client information. Chinese managers laugh at this. If they won’t report on their activities, they are clearly going to leave you. )

The best way to make this happen is through regular group meetings where specific clients, products and transactions are discussed. You should make a habit of routinely meeting with significant clients AND SUPPLIERS.

We also strongly recommend you implement client-tracking software that will record client and prospect information, transaction history, expenses, etc. These systems can be fairly inexpensive, off-the-shelf products (such as ACT!), or custom designed systems.

4) Bonuses and commissions are directly tied to how well your Chinese sales team performs with the above requirements.
Commissions are the most common way of paying salesmen because they are effective. Use the same principle to solve the problem of staff turnover.

Pay bonuses and commissions based on your staff’s compliance with the policies we’ve been discussing.

Consider offering Retention Bonuses. Pay an extra bonus after 1 or 2 years.

Bribery works, but only if people know what they are being paid to do. So make it clear that you are willing to pay people extra for building up your company’s institutional knowledge – and penalize staffers and managers who don’t cooperate.

Employee turnover is a huge challenge for China businesses and managers – but it only gets worse if you pretend it doesn’t exist. Be honest with your staff and managers, and explain to them the value of building an institutional knowledge bank. As long as you are consistent and follow through with both rewards and penalties, you will find that this system helps improve operating efficiency within your organization, even when staff turnover is high.

China-based managers have started paying more and more attention to sales management in their organization. It is the latest “bottleneck” to pop up for top management in China, and the number of options available is slim.

Companies are faced with the traditional build vs. buy dilemma that Chinese HR managers must always contend with. They can try to develop their own internal human assets and “build” sales managers from among the ranks of their existing sales teams. Alternatively, they can look outside for experienced sales managers from outside your own organization.

Build your own Chinese Sales Manager

Key skills to develop are the ability to SELL and the ability to MANAGE.

If you are considering someone from within the company, it is likely that they are already competent at selling and promoting your product, working with clients and understanding your products.

Helping a salesman develop into a sales manager is usually a matter of training and development. They must possess not only strong TECHINCAL abilities, but also leadership and management skills. Make sure they can set sales targets, manage expenses and compensation plans, and develop a compensation plan. Developing management skills in salesmen can be tricky anywhere, but particularly in China where sales has traditionally been “relationship based”.

Finally, you should consider investing in a “train-the-trainer” session for your up-and-coming new sales manager, since the ability to train new hires will be a key part of his business as your China business expands.

Buy a new Sales Manager from the outside.

Many country managers have found it more effective to hire a sales manager from the outside to come in and run their Chinese sales team. Two things to beware of here are the high cost and relative scarcity of qualified sales managers in China. Desperation has led many top managers to make unwise choices – and ex-pat managers in China have been the worst offenders.

Beware of these potential pitfalls when shopping for someone to lead your Chinese sales team:

Inappropriate experience. Not all experience is the same. You want to hire someone who knows your industry, your products and your clients. Managers with experience that doesn’t apply to your situation or market will hurt your organization by misusing valuable assets and material – and my destroy your Chinese sales team’s morale by insulting those members of your team who have stronger industry experience but were passed over in favor of the outsider.

Inappropriate skills. You need a manager and a team leader. During your search you will come across many candidates with good technical abilities in terms of your company’s products and services, and others who have strong sales abilities. None of this matters if it doesn’t help them successfully execute your organization’s goals.

Inappropriate personality. This is a big issue in China. Sales managers must be independent, yet follow the company plan. They must be good salesmen, but also supportive and cooperative leaders and supervisors. You must avoid ego-problems (a common sales pitfall), little-emperors (managers who view YOU as the competition) and bench-warmers (people who rise in an organization by virtue of showing up consistently but don’t really distinguish themselves). In China, a salesman can make a career out of taking orders and “going with the flow”, but a sales manager can not.

Once you have found a suitable candidate, don’t take your eye off the ball! You will have to monitor and supervise the activities of your sales manager closely until you are certain that they fit in well with your organization.

Your expensive new hire has agreed to perform a certain task by a certain time. Done deal, right? Wrong. Don’t take anything at face value.

One frustrated manager reports — “I hired a newly minted Chinese MBA — a very bright kid who seemed to have all the answers. I wrote out a short list of products I needed information about, and told him to have an executive summary of the market conditions by the time I returned to Shanghai in two weeks. We discussed the list several times, and he said he understood perfectly. When I returned I found that he had made absolutely no progress. The reason? He said he didn’t know what “executive summary” meant.”

This sort of miscommunication is starting to pop up in business cities around China again. It’s a classic problem of rising expectations. New graduates have far better skills than the class of 2001 – but they still lack experience and capacity for independent thinking. China-based managers have been fooling themselves into believing that because their new hires are more articulate and presentable than in the past, they are by definition more competent and capable. It’s flawed logic.

The better your raw materials, the better your process must be to take advantage of the potential. Your new hires may SOUND more and more like Ivy League graduates back home, but beneath the surface they are still a product of the Chinese education system. It’s the MTV Generation with Chinese Characteristics.

Don’t let desperation and false optimism give you a distorted view of your staff and partners. We’ve been down this road before in China. Every time there’s a puff of wind at our backs, ex-pat managers in China start planning on smooth sailing for years to come. That’s a sure-fire recipe for problems.

Yes, your new hires have the best skills of any graduating class in Chinese history – which really is positive news. But that means you need to invest MORE effort into training and development – not less. The new generation of Chinese business grads are more ambitious and have tremendous potential, but until they get experience and coaching they are not ready for unsupervised responsibility.

Developing markets is value-building. You become an expert in something; you have a customized product, and a growing customer list.

Exploiting niches is stumbling onto a great opportunity that no one else has noticed yet. Being able to make money from a market niche you spotted is the sign of a ?heads-up? manager who knows what’s going on.

But they are not the same thing. Unusually profitable market niches usually get discovered and then prices are driven down by market forces. (more…)

Do you constantly have help wanted ads out and waste hours every week interviewing inappropriate candidates? Are your expansion plans being put on hold because you don’t have enough qualified managers or sales professionals?

Yeah, it’s a China problem. Not enough people with skills, and when you train them they take off for double the salary you were willing to pay. Everyone wants a fortune, regardless of their professional experience or job performance. And you need more and more bodies just to handle customer inquiries and existing business.

It’s HR with Chinese characteristics.

Here are a few ideas that have made dumber managers than you look positively brilliant. You?re welcome.

Cross-train

Got someone on your team that you can work with? Start training them in other jobs and functions. Look at what I just wrote. I didn’t say - ‘throw your sole competent employees into a series of never-ending fire-fighting tasks.’ That’s what you are actually doing. I said, ‘TRAIN them to actually take on new functions’. They like that better than being your fire extinguisher.

Over hire

You’ve got a sales team of 10, and you are adding a new representative. Well, we know that of the 10 you have, 1 or 2 (or 5) are going to give notice this year. So consider keeping the ads running until you have 2 or 3 acceptable candidates. It doesn’t cost much more to train several people at once.

MD programs

Management Development. You have a plan for your smart young managers. You know you want to promote them and let them take on more responsibility. Have you told them yet? Give it a try and see what happens. Panel says — ‘Improved Performance’. Crazy, I know. But when you tell young managers you are planning for their future, they start planning as well.

Promote & specialize

Same idea as MD, but on a smaller scale. Just remember — western managers wait to see performance, then they give the raise and the promotion. Chinese staffers want to see the raise and promotion — then they’ll deliver the performance. It’s up to you to figure this one out.

Retention programs (ie: MBA, pay for school, etc)

The oldest trick in the book. Pick up the tuition bill for MBA, training programs, language school, etc in return for an agreement to stay with your company for a specific period of time. Has been working since Arp sent Gop to that wheel-making workshop in return for 2 years of labor and a mammoth tusk. Good as part of the management development program we talked about. Tends to be pricey — and the moment you pick up the tab for one staffer the swarm will begin.

Re-examine other options.

Local locals — getting better.
Experienced ex-pats — getting cheaper
Outsourcers — a little pricey, but once they’re set up they’ll free you to perform high-level management functions — like getting your other outsourcers to finish their work.

Time it right.

The market gets much tighter after the Oct 1 National Day holiday, as people start digging in for annual bonus in February. Move soon, or make plans to work with your existing resources until March.

Will this end your HR dilemma in China? No, but it may help a little. At the end of the day, you’ll live or die by 2 simple rules:

Success in China is a function of how well you manage your human assets.
In the absence of good experience, managers must learn to train effectively.

Good luck out there.

I was trying to explain Corporate Culture to a couple of ex-pat owners of a Shanghai business over the weekend. This is what I should have said:

It’s 1995. Bobby C. is the company’s only salesman. He’s good at it, and gets more and more responsibility. Bobby C believes in careful selection of new salesmen and continuous training of sales staff. As a result, the company and Bobby C prosper. Quality of the sales team becomes a competitive advantage.

Bobby C keeps getting promoted, until now he is not really involved in day-to-day operations.

What happens over time?

A) New managers don’t have Bobby C’s management philosophy. Since the quality of the sales team is not a problem for the company, they feel safe in cutting expenses related to T&D (training and development) in the sales department. Within a year the sales department is the company’s number one problem. Sales are down and morale is poor.

B) Bobby C’s methods and philosophy of managing his sales department became company policy. Each subsequent manager or supervisor that Bobby C worked with for the last 10 years understood how to lead that team. Pay levels stayed above average, the HR department was constantly recruiting new sales staff with high potential, and training was systemic and well-planned. Instead of fading away at the sales department, Bobby C’s methods have become ‘best practices’ throughout his company.

What’s the difference between those scenarios? Case A started out with a winning department, but because it didn’t have institutional memory it wasn’t able to maintain it’s competitive advantage.

The second case used the ideas of Corporate Culture and institutional knowledge to build an organization that was bigger than any one manager. Corporate Culture can be thought of as the personality, or attitude of the company. Some organizations are very aggressive & sales oriented — and every person within that company reflects and embodies those values. Other companies are more conservative — and the entire team reflects that characteristic.

SMEs in China need a distinct, understandable corporate culture just as much as their international counterparts. And be careful about writing some BS mission statement (here at ShangDesign, our people are our No. 1 asset?) and then doing completely the opposite! That will say more about your organization’s TRUE culture than you want to.

Chinese sales managers and top managers - be warned: Summer is over.

I know, it?s still hot and August is barely half gone. But summer is over. Fall is coming, and you?ve got to get ready for the busy season.

Efficiency is the name of the game in the coming season. Fall is busy in Shanghai, but it?s also chaotic. Schedules get full, weird holidays disrupt plans, and the big winter slow-down looms over us all.

When you want to make your Chinese sales resources go as far as possible, adding new bodies isn?t always the answer. Crank up the efficiency of the people you have by focusing on Closing Rates.

Math.
A Closing ratio is the number of people you sign contracts with divided by the number of prospects you start speaking to. It?s very subjective, and you only use it as a rough gauge. (Put away the calculator). If Ted speaks to 8 new qualified prospects a month and signs 10 contracts in a year, his closing rate is about 10%. (8 prospects X 12 months = 100, divided by 10 sales gives you a closing rate of 10%).

Once you have an idea of what your closing rates are, you have two options for boosting sales.

Make more money from the customers you have
Find more customers

You can try to do both at once, but they are not equally effective for each industry.

More money from limited number of customers

If your clients are specialized or you already sell to a large percentage of the players in a market, then you may want to focus your efforts on getting more and bigger deals with people you already sell to. Look for ways to ?up-sell? or make higher-value sales to the same organization. You should make sure your key accounts program is in good shape. Take a look at your Customer Service department, as well. You don?t want to invest a fortune in a sales & marketing team, only to have your expensive new client walk away dissatisfied with the level of service.

Many service providers find themselves in this category. Industry specialists and niche players are here too.

Train your team to qualify their leads and negotiate effectively. Go back and review your relationships with existing or recent customers.

Make sure your team can solve problems and make broad contacts within key accounts.

Market Growth

If your industry is large and growing and/or your product is limited to just a few different offerings, then you should be looking for more customers.

This describes FMCGs (fast moving consumer goods), mass-market manufacturers, retailers, and any other business that wants to expand through growth.

You should be focusing your sales team?s efforts on prospecting, cold-calling and networking. You should make sure that your marketing material is clear, up-to-date, and effective enough to persuade prospects.

The point is to understand the dynamics of your market, and then develop a strategy for capitalizing on it.

Swot analysis.

Take another look at the Competitive Analysis part of your China business plan. If you did it more than 6 months ago, it probably needs re-writing.

Using SWOT analysis to understand your China Market

There are a lot of people who have never used SWOT analysis, and they get a little intimidated by the name. Let?s take a look at an example of Competitive Analysis with a SWOT framework.

It?s really very simple. SWOT is basically a set of 4 lists.

Take a look at your company. What are your Strengths, what are your Weaknesses? Lists 1 & 2 apply to your business.

Take a look at your market, industry or economy. What?s the good news? What are the potential threats? Lists 3 & 4 describe your environment. Opportunities and Threats.

Now format your lists as an attractive chart. One big box, divided into 4 smaller boxes. Box 1 = Strengths. Put the list of your company strengths in this sector. Box 2 = Weaknesses. Ok, that takes care of the top half of the chart — Intenal Company matters that you have some control over.

The bottom row ? Box 3 = Opportunities, and Box 4=Threats. That?s the industry half. You can prepare for these things, but you can’t really change them. Oil prices, gov regulations, economic trends — that sort of thing.

You?ve just done a SWOT Analysis.

Congrats! You?re a Market Consultant! Take a long lunch and charge it to the company ? you deserve it!

The Content Counts

Hold On. You?re not done yet. Because the lists you make are actually quite important.

S-W. Strengths and weaknesses. This is an internal matter. Take a good look at your company compared to your competition. Every company has its own unique set of concerns and challenges. But every SWOT analysis in China should include these 5:

HR
Sales
Brand
Quality
Growth potential

O-T. Opportunities and threats. This refers to things you have no control over ? but they have control over you. Economy, market trends, competition. The China OT list begins with these:

Legislation
Competition
Economy
Market & Trends
Technology

Are there more entries that should be on the lists? Yeah, probably. Every company is different. But don?t do a SWOT in China that doesn?t include these 10 items.

Who do you SWOT?

SWOTs work well when comparing your company to something else, or seeing how you would do in a new market. So consider running SWOT analysis for individual products or plans as well as for your company as a whole.

You can also run SWOT analysis 1 on 1 against a specific competitor. Or a specific product.

SWOT analysis is really just a simple method to help make lists in a systematic way ? and gives people an organized framework for discussing things. Don?t get hung up on the process ? but make sure that competitive analysis is a routine part of your Sales & Marketing management plan.