Starting next week, many China based managers are entering a very unsettling period. Christmas and New Years holidays are on the minds of westerners and home offices, but Chinese New Year and the big spring festival are still almost 2 months off. It doesn’t make for a very productive time – but you can’t just go into hibernation for half the winter.

Ex-pat managers in China are going to have to figure out ways to make these coming months valuable and to minimize downtime due to holidays, travel and vacations. Most companies will lose people right after the Chinese New Year holiday at the end of February, and you should use this time to deal with any outstanding HR issues.

1) Make a policy about holidays, and publicize it to staff, home-office and clients.
2) Year end reviews and plans for the 2007.
3) Projects, client databases and mailing lists.

1) Make a policy about holidays. Are you shutting down for Christmas? New Year’s Day? When will your CNY (Chinese New Year) holiday start and end? Don’t bother looking for official government guidance – there is none. If you are keeping your doors open for the Chinese holidays, make sure your suppliers and customers are doing the same. Confusion over holiday vacation schedules has lost its amusing charm. If you run a multi-million dollar company, you should know basic facts such as when you are open and when you are closed. By the end of November I was hearing about some local businesses delaying decisions or plans until after Chinese New Year. That’s almost 4 months.

2) China managers know that they will lose people after Chinese New Year, but you don’t know who. You still have time to secure your top people and repair any frayed relationships. It’s also a good time to start suggesting some the grass may be greener somewhere else for those not making the grade. Don’t assume anything. Your best people are getting the best offers from competitors, while your weakest staffers may feel they can’t do much better than your shop.

3) As some of your team gets ready to pack up and leave after CNY holiday, you may be better off coming up with some productive year-end projects that will be completed within the next two months. It’s also a great time to review your mailing list and make sure your client info is up to date. Be careful about who you let start a big sales & marketing effort as the year winds down – when your salesmen leave your company they take their client relationships with them.

Let’s start the new week slow. China is getting more competitive. Specifically, Shanghai’s high-end market is getting extremely tight. New entrants are moving in and old players are moving up. Everyone wants to grab a piece of the top, and that means customers are getting pickier and pickier. There was a time when Chinese markets were characterized by shortage, and buyers were just happy to get their hands on high-end imports. Nowadays there seem to be new luxury shops and expensive service providers popping up all over town.

If your customer service is weak, then your business is vulnerable to competition. You may be educating the market for the benefit of your competitors.

It’s not complicated. Focus on the needs of the customer. I have a rule about customer service when I’m buying – if the cashier or service person starts a new conversation with a third party while I have money in my hand, I walk out. (If I am trying to pay for something I have already used, such as a restaurant, I complete the transaction but won’t return to that business.)

China business owners like throwing money at problems. Our retail shops are over-designed and overstocked, our bars are over-themed, and our restaurants are over-hyped. Everything is beautiful from the outside. But the level of service still lags far, far behind. If you have dressed up your business but can’t back it up with good customer service, you are simply making promises you can’t keep. And that may explain why you are having trouble protecting your profit margins.

Start applying some basic QC rules to your service process. That means putting someone in charge and making them accountable. If you have to use secret shoppers or bring in expensive consultants, then do it. You may have to spend more for your front-office people, and you will have to invest in training and supervision. Here are a few issues to focus on:

Transaction. When your cashier or service person completes 90% of the transaction and then starts dealing with a colleague or another customer, they are basically screwing up all of your hard work and expensive branding efforts. This should be easy to fix but the level of service in Shanghai is still appalling.

Phone and personal skills. If you are hiring people who can’t answer a phone or greet a customer, then it seems that you really don’t want the business. When I walk into a shop where the clerk is leaning on the racks of merchandise and gabbing with a co-worker, there’s simply no way I am paying a premium price. This seems to be a bigger problem in high-end stores that don’t see a lot of foot traffic.

Basics first, then extras. Before you put exotic items on the menu or expensive brands on the shelves, you have to make sure that you are taking care of the basics. Customers want sales people who can acknowledge their existence, answer a few basic questions and complete a transaction. Once your operation can handle the minimum requirements of commerce, then you can start getting clever and innovative. Otherwise you are just making yourself look foolish.

Keep your promises. Don’t talk to me about luxury service if you can’t deliver. Yeah, I know that ‘this is China’. I also know that good managers and owners have gotten it right here. If you want to charge NY prices or advertise international levels of service, you had better be able to back it up.

Look at your own front office. Experienced luxury goods companies have a simple rule about hiring – don’t hire people to sell a product if they don’t know how to use them. If you couldn’t imagine your sales or customer service people using your product, then you may be hiring too cheaply.

Too many China operations are left to operate on auto-pilot, while the owner is off making big deals or following up on new opportunities. Owners and senior managers are the first line of defense in the battle to keep your customers coming back. Make sure that your entire team is taking good care of your business by taking good care of your customers.

I once showed my friends and family back home a 2 minute film clip of a typical street scene in Shanghai. I think it was the corner of HuaShan Lu and HuaiHai Lu. After watching the traffic and pedestrians for a little while, the typical remark was that if the bus advertisements and shop signs weren’t in Chinese, they might not know it wasn’t a developed western city.

Many new western managers in China view their China operation in much the same way. Because it’s a western-style building with familiar equipment and a logical org-chart, all you really have to worry about it the language problem.

If only it were that simple.

I recommend that anyone starting a China posting go to the China Daily bulletin board and look at the thread “working for a foreign boss”. http://bbs.chinadaily.com.cn/viewthread.php?tid=530601&extra=page%3D1

Bear in mind, this particular forum is favored by high school and college students, so the level of sophistication is fairly low by Chinese standards. The people you hire for your high-profile spots will probably be much more experienced, articulate and worldly. But once you spend a few minutes reading the comments of these kids who are just starting their international careers, you get a new insight into the thinking of your rank & file staffers who you probably don’t really know very well.

A few things hit me right away.

They really do care. As the foreign boss, you will probably interact with a handful of key people and have only a nodding acquaintance with the majority of your staff. You will probably notice that most of your team barely makes eye contact with you, and that conversations tend to stop dead when you enter the room. This is a pretty creepy phenomenon, and it can cause you to jump to the conclusion that they despise and resent you. While that may be true in your case (kidding - I kid because I love), it is not the rule. Your staff is incredibly interested in making SOME kind of contact with your, but just haven’t found a method that works.

They are anxious. They are talking about you. Discussing you. Analyzing and reviewing. Forget all that noise about globalization and the rise of empires and competing economic systems. These are 25 year olds. They are excited and nervous and ambitious and pumped up all the time. And to them, you are half-rock star and half-ET. They want to know about your life and the way you react to their world. They care about your impressions and worry about your opinions.

They have no idea how to approach you. You may notice that when you first meet them, they may make a half-hearted attempt to build some kind of connection. It will probably be awkward and inappropriate, and you will deflect it quickly. And that’s when they start “ignoring you” and looking down when you pass in the halls.

If you are like most managers in the world, your most likely response is probably something on the order of “so what”? You are trying to run a multi-million dollar business, and can’t really be bothered with the social development of a gang of awkward 20-somethings who will probably be working somewhere else in a few months.

BUT then you remember – “Hey, HR is my number one problem. I have high turnover, escalating head-count, rising salaries and an expansion plan that is driving me crazy”. And those weird, anxious, giggling staffers might actually be bright, high-potential, ambitious team members with the right kind of effort.

Should you start hanging out with your junior staff, going to Canto-pop concerts and sending QQ messages all day? Well, it’s your call, but there are probably more time-effective methods.

Remember those expensive team building and leadership skills training programs you used to send your senior people to? All those articles you read about cross-cultural communication and coaching and mentoring? Well, here’s where you get to put them all into practice. You are not just an international person – you run an international organization. Get your senior and middle managers involved in your company’s corporate culture, and have them coach your younger people. Chinese teams (like all teams) tend to form naturally along personal lines. You can do yourself a big favor by applying a little more structure to the bottom of your organization, and charge your new class of company leaders with the task of developing your younger staffers. Make sure they are delegating important tasks and following up on the results. Once your younger people are more engaged in your organization, you and they will have more common ground and shared experiences.

Once your people are a little more familiar with your company’s goals and procedures, you may find they are a little less twitchy around you. And before you know it, they may stop asking if you have ever used chopsticks — and start asking if you have ever considered marketing to this or that overlooked city or adding a particular feature to a new product.

All sales are not created equal. I used to be an institutional broker for an investment bank specializing in Greater China equities, and we were always wary of companies whose earnings came from real-estate sales (for companies not involved in the property business) or from non-operating sources. The money spends just as well, but management can’t repeat the deal on a systematic basis.

Make sure that your China sales team isn’t leading your company down the wrong path. Salesmen just want to do deals and tend not to be too concerned with your long term strategy. (That’s more of a Sales Thing than a China Thing). You on the other hand, have a business to build.

There is a hierarchy of sales for most companies. The top of the list should be long-term, high-value added sales to key accounts or regular customers. The bottom of the pile are non-sales to potential competitors who eat up your sales team’s time and effort but don’t buy. In between is a whole range of one-off, opportunistic sales that vary in terms of value-added and transparency.

Owners and managers should train their teams to emphasize long-term sales of high-value products and services with established clients who work with your salesmen to plan out purchases long in advance. They treat your company like a partner and your sales rep like a consultant.

Key account / Partnership: These sales are characterized by high levels of contact between the two companies. You know their goals and operating methods, and your sales representative has ready access to all the key decision makers. You are not selling as much as you are consulting and advising on business issues. Yours sales are growing with their business. It is common to sacrifice profit margin for stability, but these kinds of accounts will make up the foundation of your business.

Planned, transparent and regular. The next best thing to a key account is a regular customer that places regular orders for high value-added products and services. These clients know your brand and trust your sales team. You don’t have to fight for every order, and their purchasing people are open about expansion plans, new product development and operations.

Periodic sales. Maybe your company isn’t the first supplier they’ll call, but you are within the top 3 or 4. Your sales people are familiar with the client and will get a reasonably good reception when they call with new product or service information. These clients may contact you when they need something, but it is more likely that your salesmen will initiate the contact.

One-off sales. These are opportunistic buyers. They are looking for bargains, quality or new suppliers. Maybe their main supplier is out of stock, unable to provide the service, or has disappointed the buyer on the last order. One-off sales tend not be as profitable as long-term relationships (in many industries), but make up the bulk of orders for young companies. Your job as a manager is to make sure that your people are doing their best to convert one-offs into regular customers.

Non-sales. Your guys are working hard but not getting anywhere. In China, we call this “relationship building”. It’s not ALWAYS a bad thing, if it will lead to future relationships (or if you are using them to train your new hires), but will eventually bankrupt your company if you let it. Be aware of competitors and researchers posing as prospects to get information from you. If your team is carrying a lot of non-sales on their call sheets, you may want to get involved and provide some coaching or other remedial action. Non-sales may not be serious or qualified buyers – but they may be genuinely interested prospects who are unimpressed with your product, service or salesmen.

What can the owner or manager do? Use your sales meetings as a tool to determine how your people are spending time. We’ve often talked about the need for senior China managers to provide coaching to their team members. Well, this is a great opportunity. First gather the pertinent information and identify your problems. Then develop a strategy for attacking the situation, and track the results carefully. When you find an effective method, make sure you incorporate it into your company’s best practices and future training programs.

Pop quiz, hotshots: What if your team does great?

Yeah, that’s right. What if you’re sales & marketing effort is a huge hit? What if you beat your goals & targets? Cigars and champagne and a nice holiday in Phuket for you this Christmas. Clear sailing, blue skies and the wind at your back forever, right?

We at ChinaSolved are never content to leave well enough alone, and we’re not about to let you do it either.

Managers in China have gotten so used to crisis management and firefighting that we are sometimes unprepared for good news. Complacency kills. For many of you, the end of December and January are going to be relatively slow, so use this time to review 2006 and plan for big things in the new year.

Move the goalposts. Yes, you are great and talented and wonderful. With you at the helm of your department or organization, your team has achieved tremendous success and met its goals. But there are two general reasons organizations hit their targets. One is that you are really doing everything exceptionally well. The other is that the target was too low. Give yourself and your team an aggressive but reasonable objective for 2007. That includes more than just sales figures – make sure you are also building a stronger, smarter, tougher organization that can compete with the flood of new overseas and Chinese entrants.

Share the wealth – and the credit. If sales are great it is most likely all because of YOUR individual efforts, right? Well, the 15 salesmen breaking down doors all over China may have helped a little. The bonus and commission checks are nice – but make sure they know that you and the whole company appreciate their effort. You have to be very sensitive to the realities of the China market. A winning sales team makes a very attractive target for headhunters and competitors. Do your people feel like winners – or exploited beasts of burden? As the year winds down and we head into the holiday season, take time to discuss the future career path of your heavy lifters. You know that they have a big future with your company, but they may not. Make your career planning explicit and transparent.

Analyze the data. You wanted to sell 100,000 widgets, and you sold 101,000 widgets. Booyah! Congratulations! But hold on? Who bought what, and why? Was the composition of your sales what you thought it would be? Did you execute your plan extraordinarily well, or did your competitor’s factory blow up? Maybe the sages are right and it is better to be lucky than smart – but it’s even better to be both. Before you hurt your arm patting yourself on the back, run the numbers again and find out EXACTLY what you sold, who you sold it to, and why they bought.

Competitive Analysis. A big, effective sales & promotion effort means that you have been educating a whole new class of buyers. As markets change and develop, new competitors enter and old players improve. If you are working in a niche market, make sure the competitive environment hasn’t changed. This is a great time to take another look at existing competitors, new entrants, and potential substitutes. Make sure you are not developing the market for your low cost competitors.

Expansion plans. Sharks die if they don’t keep moving forward. Use your 2006 experience and data to plot a new course for next year. Re-check your assumptions and re-analyze the market environment. I know of a few managers who plan on expanding into little-known, over-looked backwaters like Suzhou, Wuxi and Hangzhou. Well, guess what – those once quaint little towns are now bustling commercial centers that can match (or surpass) Shanghai and Beijing for services, infrastructure and market access. If you are working off a “2nd City” expansion plan drawn up in the US 18 months ago (and many of you are, whether you know it or not), then you need to seriously re-evaluate your road map.

Dear Readers –

ChinaSolved.com has had a great run since it’s relaunch in September, and we truly do appreciate everyone’s support and interest. We look forward to delivering more articles, posts, profiles and comments in 2007 — and beyond.

BUT - and you knew there was a BUT coming - we are less enamored with the spam, porn, pharmacy ads and garbage that the comments section has been attracting. Until we figure out a good, permanent way of dealing with this issue, we have temporarily suspened the comment section.

If you have anything you would like to see put up on the site, please email directly to comments@chinasolved.com .

Thank you very much.

Last week I had a great conversation with an HR manager from a major international logistics firm whose China HQ in Shanghai. Knowing that employee retention was big issue, I asked when a hard-working new hire could expect his first big promotion. He told me that their management training program for new graduates is 2 years long. But the average length of employment for new hires in Shanghai is only 18 months. Now, I’m no math-ologist, but it seems to me that 18 months is almost always less than 2 years.

How can you retain your best China people if you are following someone else’s standards and processes?

1) Localize your training & MD programs.
2) Interim, highly structured promotions.
3) Build in milestones and hurdles to mold the kind of employees you need.

There are two kinds of passivism that will threaten the success of your China HR program. The first is, “That’s not the way it works in China.” The second is, “That’s not the way our HQ does things.”

1) HR is the acid test of successful Chinese management. If you have a global HR policy, get a dialogue going with the home office about making it China –friendly (or at least less China-hostile). If you aren’t saddled with a pre-existing T&D (training and development) program, then take the time to develop a structured program that will enable your organization to build an effective team. 2 year MD milestones are fine in Germany or Chicago, but they sound like a punch-line in Shanghai and Shenzhen. Your job is to identify grads with potential, train them to be useful, and then hold on to them long enough to execute the company’s market plan.

2) 6 month bumps are your key. You should be promoting – or at least recognizing – all high-potential recruits on a regular basis. Tie promotions to specific achievements and training programs. Make them highly structured, goal oriented and predictable. Let them know what the plan is. If your people know that a significant bump is coming, they may be more likely to put down roots. Take the mystery out of promotions with career counseling, mentoring and structured delegation programs.

3) Set the bar high enough to bring your people up to the standards you set. Don’t sacrifice your standards for a fully staffed team. Many China-based HR managers are so nervous about losing people that they tolerate poor perfomance. The rest of your staff will catch on to this quickly, and before long your China office is in a downward spiral. Every HR and line manager should be on the lookout for situations that require coaching and other remedial action. Morale will suffer if standards start falling and the company consistently misses its targets.

Your HR goal is to bring your new hires up to international standards. That doesn’t mean clones of your NY office, but it does mean that your Chinese team members should be able to function to the same high standards as their counterparts anywhere else. Chinese managers have demonstrated that they have the ability, under the right circumstances, to perform at global standards. Do you have what it takes as a manager?

In the last couple of weeks I’ve run into several ex-pat entrepreneurs who have set up successful China-based businesses. They are energetic, creative, and ambitious individuals who all have big plans for China. But successful entrepreneurs have to become effective mangers – and they are struggling with the challenges of running their sales teams.

Sales management for non-sales professionals can be a real headache. Here are a few tips that may make your life a little easier – or at least more profitable.

Sales management for non-sales people starts with these 5 areas.

1) Managing & goal setting
2) Hiring
3) Training & Coaching
4) Structuring the department
5) Compensation

Managing – Salesmen can be jerks. Being aggressive and determined and focused makes them effective salespeople – but lousy colleagues. Don’t let these people bully you or bullsh*t you, as they will try to do. Salesmen are goal-driven, and sales management is about setting good goals and making sure that they get met.

Hiring – You want to find the middle between 2 extreme sales-type personalities. Aggressive salesmen will convince you that they have all the answers, but they tend to lie and will probably disrupt your operation. If you go the other way and hire a friendly “relationship” salesman, you are sure to enjoy their company but you won’t get rich paying them to schmooze all day. HINT: Pay a little more and hire someone with a few years of sales experience IN YOUR INDUSTRY. Develop them to be your sales manager.

Training & Coaching – You do the product training. Bring in pros to do the sales training. Your job as a coach is to make sure that the training has an impact. It’s best if your coaching relationships with your team are warm and cozy and life affirming – but it’s not necessary. Weekly, scheduled meetings to review performance and set goals is fine. Delegation is an important part of coaching, but requires regular feedback.

Structuring the sales department. Structure develops whether you put it in place or not. If you organize the sales department according to your own plans, it may be very effective for you. If you allow your department’s structure to “just evolve organically”, it will be effective for someone else. In China, you should always know where you want people to rise to. Have their promotions in mind and be more proactive than you would be in the US. ChinaSolved hint: Promote a bit faster in China than you would back home.

Compensation. Commission and performance based compensation plans work well. But you also have to be ready to fire the under-performers. When compensating sales teams, make sure that you are identifying and rewarding appropriate behaviors.

Whichever is the one where your kids do much better than you do, that’s the one China is in. This can be very significant if you are structuring a team for your new or growing China business. You’ll find that your incoming hires are A LOT more skilled than the Class of 1996 — but they don’t know how to do anything. Your old timers are not NECESARILLY getting better, but you may have already reached a place where you can live with one another.

Using long-term demographic shifts to your advantage is extremely tricky, but ChinaSolved is all about helping:

There are two general modes of social mobility. Americans like the old rags-to-riches story where a bright young go-getter beats the odds and becomes a superstar through hard work and moxy. We tend to structure our organizations that way. The biggest dog leads the pack. Everyone fights for the top spot, and the best & brightest seizes the day. This kind of thinking has propelled some companies to great success.

But there is another model of social mobility where the real jumps in status and earnings happen to new generations. Grandpa worked hard as a bookkeeper or a laborer, Dad went to college and got a pretty good staff position, and now junior is about to graduate from an international university program and get a management job with a famous multinational. This is the one that seems to be governing China’s development – at least for now.

The implications for China-based managers is that you have to make some hard choices about the future of your company – and about how you structure your leadership.

In the short term, you’re still looking for that happy medium where you have experience AND technical skills in one reasonably priced package. Good luck with that.

Looking out a few years, you are going to find ways to maximize the value of your tried & true staffers while developing new talent. A training and development strategy for China is going to address these two separate groups, who have very different needs.

Your China 1.0 team. 28 – 40 years old. Train them in skills, and develop their managerial and leadership abilities. Decide who you want to keep for the long term and let them know. If your company or industry hasn’t yielded any superstars yet, don’t hold your breathe. In most sectors, this generation is going to be a caretaker management story. They are going learn to execute your strategy and run branches. Don’t look for creativity, strategy or innovation. Competence and communication skills are good goals.

China 1.1 team. New grads. They are literally swarming out of universities, and would be great bargains if they could actually do anything. Get very specific and ambitious about what you want. Think of them as the raw material for your future legion of loyal minions. They have good skills, but NEGATIVE experience. (i.e.: What little they know of the business world is wrong). If you have the time, patience and budget to mold and shape, then I have two words for you: Orientation Program. These people are blank slates, and you have an opportunity to set them on a path towards innovative and creative thinking if you start early enough. Don’t let your older staff dull-down the new kids. These young hires are years away from true productivity, but if you can develop and hold on to the right people you may be looking at your future company leaders.

There’s nothing more amusing for western managers in China than reading promotional material and instructions written in poor or misleading English. ‘Shake vigorously’ becomes ‘agitate with energy feeling’ and such. Soooo funny.

Oh – when was the last time you checked on YOUR company’s promotional material? Because there’s a definite possibility that you sound just as funny in Chinese.

Every experienced sales or marketing manager knows that sales and product information has to be completely redone specifically for the Chinese market.

There’s a great chance that the promotional materials you are using now are based on your company’s approved designs that are used in other markets. And maybe when you first started setting up your China operation you had it translated – quickly, by an assistant and a salesman – and you haven’t had time to worry about it since. But one problem with fire-fighting is that even after the fire is put out, things still smell pretty bad. So double check your own Chinese-language sales, promotional and instructional material to make sure that you sound as intelligent in Chinese as you do in English.

Stages of localization. If you translate your motto, slogan, and product description directly from English to Chinese, you are likely to end up with a meaningless mess. There are three levels of localization:
Translation
Interpretation
Customization

Unless your material has been customized for the specific Chinese markets you are targeting, you are playing with fire.

Market characteristics. You might change your sales material from one market to another within a country if buying patterns required. Your challenge may not be about translation or interpretation – communicating about your brand may require a completely new approach. Some ex-pat managers in China have figured out that not every misunderstanding is about vocabulary or pronunciation. If Chinese people want to put squid on pizza, it may not be because they misunderstand pizza. They may like squid.

Design issues. I have been waiting and waiting for Chinese websites to start looking “normal”. They already do – to Chinese viewers. Design, aesthetics and style issues have a big impact on the effectiveness of your sales & promotional materials. The chances are, you will to make expensive adjustments. Start working on your HQ early, because one of the few things that your VP of Marketing and CFO will agree on is that you can’t redesign the company’s approved marketing material.

Salesmen feedback. They know how people feel about the sales material, because they use it all the time and talk to customers about it…or do they? Talk to your sales team and find out 1) if they are using the material with clients; and 2) how effective it is. These are your experts.

Testing. If your promotional materials are integral to the sales process, you should consider hiring a marketing firm to run focus groups and market tests.