The Trend Is Your Friend – Or the End.
A recession in China will clear out the underbrush – but the survivors will be tougher and more competitive than ever. You need a new business plan that will do two things: help you survive the downturn – but also position your business for the next growth phase.
Use your down-time constructively. You’re up against two dangerous trends, but you can use both to your advantage. First you have to survive – but you also have to transform to meet the needs of a post-recessionary China market that is more sophisticated, demanding and value-oriented.
A recession in China is going to wipe out a lot of marginal businesses. Your first priority is surviving the downturn. But in China, simply surviving isn’t going to be enough. When this economic meltdown is finally over, the landscape will be different. China will become a more sophisticated, competitive and service-oriented economy. That’s why your second priority should be to re-engineer your business to take advantage of the new Chinese economy.
Look for these trends in a post-recession China.
-
1.More sophisticated consumers. They’ll pay more – but will demand more. It’s not about low cost – it’s about higher value. In the past, there were 2 Chinese economies – the high end luxury market and the mass low-cost, low-value market. Lux is going to take a hit, but the masses of Chinese consumers are going to be much more conscious of value and service.
2.More competitive SOEs. China’s State Owned Enterprises are not going away. A severe recession in China is going to make them stronger as it wipes out competitors and starves smaller companies of cashflow. Anyone who competes directly with state-owned companies had better plan on seeing them grow their market share and come out with new products and services. Chinese SOEs have been the real engines of growth and transformation, and that trend will intensify.
3.More nimble competition. They rent-collectors are going to get wiped out, but a new breed of fast & furious local competitors will emerge. There is an army of Chinese entrepreneurs who have been crowded out of the service sector by international competitors with deep pockets and international marketing savvy, but in the post-recession Chinese economy these fast, smart, little service companies are going to steal someone’s lunch. Make sure it’s not yours.
4.Networks are not a buzzword – they’re people who are connected by a common need or interest. It’s not enough to build up big lists. You need to interact and to monetize. Social networks are real – but they aren’t an end unto themselves. You can’t just shout your message – you need to monitor and analyze and listen.
5.Trends are friends – or bad ends. Parts of the Chinese economy will come back to double-digit growth – but it will be a different kind of growth. No more advantage for first movers. You won’t get paid for showing up in the new China. Whether your firm services multinational corporations or markets directly to consumers, you are going to find yourself in a more competitive, demanding marketplace after the world economy rights itself. You can use this to your own advantage by positioning your company to meed the demands of the new China market - or you will be playing catch-up with a host of new competitors who focus on delivering value.
Things are slowing down at a lot of international firms here in China. Use the down-time to your advantage. Put your top people in a room and make them imagine that it’s November, 2010. What will your industry look like? Who are your customers and clients? What will THEY consider your value-added services? What does the 2010 Chinese consumer look like, and why will they care about your business?