6 weeks until ChinaSolved relocates to NY in July. As I prepare to move operations to the US for a while (until December), I’m having doubts about the popular myth that Chinese companies & brands are preparing for mass decampment upon Western markets. It’s a good goal on paper, but I’m going to join in with ‘Go Global’ doubters like China Hearsay’s Stan Abrams . My reasons are a bit different, though. It’s not that the Chinese can’t put together an exportable product or brand – just that it’s not really their priority right now.

Forget the Expo and ‘global harmony’ noise. China is looking within – and the next 18 months are likely to be characterized by an increasingly cocoon-ish approach towards overseas involvement of all types. For the international set in Shanghai, this raises new possibilities and new risks.

China’s New ‘Journey to the West ‘– Straight to DVD
The West is looking shaky at the foundation – just where Chinese investors fear it most. Geely-Volvo seems to be the exception rather than rule, and there is more talk about the quirky personalities than the commercial prospects. China managers will get more bang from their buck (kick from their kuai ?) if they focus on refining successful domestic models for the Chinese market. Whether this means updating traditional methods or developing something new with local talent, there is little useful to be learned overseas for Chinese decision makers.

Can’t always get what you want, but if you try real hard…
Everyone wants both a strong domestic market in China and a far reaching network of well known brands abroad. It’s not that the international or Chinese market is worth more or less – it’s just that Chinese companies aren’t going to do both at that the same time. They don’t have the depth of management talent to try inventing new brands abroad and developing new domestic business at the same time.

Developing stronger domestic distribution channels and brands is already the stated policy of many SOEs and state directed firms. International business is going more and more niche in China. Export, OEM and manufacturing have always been better businesses for the MNCs than the Chinese – who were getting 2 – 3% margins. Chinese companies made money selling high end real estate and mass market consumer & household goods to huge, huge numbers of people.

International managers should figure out their true competitive advantage
International managers in China should play to their own strengths. Servicing the top tier MNC service supply chain makes more sense than ever – but specialists win. If you can’t explain how you boost the bottom line, then all the guanxi in the world won’t help. If you have a shortcut for helping qualified Chinese companies increase their overseas exposure or help Western investors find the right targets over here, then you may just find that your value in China is actually growing.

Be ready for two new kinds of transaction that you may get involved with.

1) Chinese firms trying to access Western markets directly – either through existing brands or acquisitions.
2) Western interests looking to enter China through investment, M&A and partnership.

The name of the game will be the ability to deliver market access and stable businesses. The old model of groping in the dark for 6 months is out of sync with the on-the-ground realities of rising costs and intensified competition. As US companies recover and set their sites on new markets, they will want to buy market entry – not build it. Likewise, Chinese SMEs with cash in hand will prefer to buy established brands and firms – not try to reinvent their existing brands for markets they don’t know.

While these are likely to be the important models for cross-border business in the coming decade, the potential will be hard to realize. As your Chinese counter-parts are discovering, it’s gotten very challenging to be really good at a wide range of fields. Westerners entering China have very little in common with Chinese firms expanding to the US and Europe. Most successful players in this next level of international management in China will probably favor competent specialists over good natured Jacks of All Trades.

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