What is your China strategy?

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This is the PowerPoint presentation from the 'What is your China strategy?' workshop presented in Melbourne and Sydney, Australia during May, 2012.

For more information contact morry.morgan@clarkmorgan.com

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  • Photo:http://www.istockphoto.com/stock-illustration-1249732-shanghai-skyline.php?st=adf893cGood afternoon.I’d like to begin my presentation with a joke my wife told me.Please bear with me.“How do you know a Chinese has broken in to your house?”“Your dog’s gone, your homework’s done, and the guy’s still trying to back out of your driveway.”(Muffled laughter)So to paraphrase, We’ve got the stereotypes of China wrong. And, the so called ‘censorship’ (he xie) that exists in China, also exists in this very room, just on a much larger level. If you were one in a million in China, the’d still be 1,300 of you, after all.
  • Now, before you storm out and Tweet about how I’m a One Nation supporter, I’d like to mention that I used this joke to highlight three points. The other reason I told you this joke, was to measure the level of uncomfortableness within this group. I noticed that a number of you smirked uncomfortably, some of you cut your laughter off before you embarrassed yourself. You self-censored.During the filming of over 30 China-based industry leaders, some of whom I will show you today, regardless of whether they were Chinese or foreign, they all practiced self-censorship. One Australian, in Beijing, was very candid about how Australian citizen, Matthew Ng was the victim of foul play, in relation to his 13 year sentencing in December 2011 for embezzlement of funds in relation to his company Et-China. The case against Mr Ng has obvious flaws that you can read about, none of which my Australian subject is willing to discuss publically.A Chinese lady, who was born in China, but now holds an American passport, was also candid regarding the government’s development of its own search engine, Jike.com. Off camera she stated that the Chinese government had and would do so again in the future, block the leading search engine, Baidu, to drive traffic to its highly regulated search engine. Again, both declined to speak on camera. Now that is the real China. While the Australian and certainly American media highlight how the Chinese Government doesn’t respect human rights and stifles free speech, it is actually self-censorship that does the most damage to ‘freedoms’. BBSs – Internet Bullet Boards – Weibo, China’s Twitter, and sites like Kaixin and RenRen employ their own censors. Chinese people, who work for private businesses, who delete contentious comments, and sometimes entire threads and topics. The government has their own hired cybergoons too, who have been nicknamed ‘50 Cent Party’ (五 毛 党), because they are said to receive 50 Miao (about 8 cents) for every comment that post good comments about the Communist Party. That’s nothing new (show ‘Jeff Kennett 99’ advertisement)
  • The first is stereotypes. Chinese don’t eat dogs. Well, of course some do, but not en masse, as some believe. It’s the Koreans. They proudly boast about eating dog, and in North Korea it has the fixed price of 500 won per kilogram. Also, China is a very, very competitive environment, particularly in relation to school, where 6.6 million university students graduate each year. On the street, it’s a dog-eat-dog world, so it’s unlikely that you’ll be the victim of a random act of generosity. Particularly with respect to schooling.And then there’s that stereotype about being bad drivers. I’d like to put that belief into a slightly different context. Not long ago, I met an American engineer, a town planning engineer actually. His firm was commissioned with fixing a rather troublesome intersection in Beijing, a city of around 20 million – about the same size as Australia. Before a plan could be put together his team set out to measure the current volume flow of vehicles through this particular intersection. A fairly routine job involving rubber strips across the road. This American engineer, who had been in town planning for his entire career, and had worked around the world, including LA – and they know their roads – then told me what they found. This intersection, which he was commissioned to improve, had a volume flow that was over 110% of capacity. That is, 10% more cars were able to cross this intersection in any given hour that was physically possible. At least based on Western Physics. You see now. That joke, while being racist, was also very inaccurate. The stereotype is dated.
  • The last point this joke highlights is the importance of ‘loopholes’.Loopholes get you out of trouble, they avoid responsibility, and they are everywhere in China.I connect Chinese society, with respect to loopholes with that of a dry river bed, complete with large gaping cracks. When the rains come, and a flood of water comes gushing down that furrow, not all that water will end up in the pond below. Water will flow down those cracks, for no other reason than gravity. Those cracks could be innocent. The use of a friend in a government office to accelerate approval, the addition of an extended family member on the home registry to increase compensation from a forced demolition. Or in worse case situations, the addition of cancerous or organ damaging chemicals to deceive measurement instruments and ultimately cut costs.
  •  Ted - ForDoing business in china (book by Ted)Can't manipulate the rules anymore - not a bad thing but less free.Establishing better rule of lawMoving towards a more predicatble business climate change Difficult to pull out. Chris Murphy - AgainstIncreasing taxation laws 32% and a half tax rate 10%holding tax, in reality 20%.Crazy import taxesCambodia has no export tax in to EEC. from China, 12% heavy protectionism Adrian LiTalent pool is getting betterDriven by market factors65 million empty apartments in China interesting business model from Adrian Biggest mobile internet population World bank 2030 report - damning for China Adrians figures show a housing bubble Buying up our brands on the cheap is not a business model Social, government and tax structure supports export over import - but selling into local market is an issue. 
  • Up to this slide 15 minutes
  • In 2009, China surpassed Japan to be our largest trade partner, with a 2009 figure of A$85.1 billion. The three large industries are education, agriculture and minerals. In 2009, approximately 118,000 actual Chinese students enrolled in schools across Australia.
  • The European Coal and Steel Community (ECSC) was a six-nation international organisation proposedin 1950serving to unify Western Europe during the Cold War and create the foundation for the modern-day developments of the European Union. France, West Germany, Italy, Belgium, the Netherlands and Luxembourg signed the ‘Treat of Paris’ in 1951 (see flag of ECSC).The purpose of this agreement was to "make war not only unthinkable but materially impossible.”
  • Today, the same is true for Australia and China (redesign flag to combine Australia and China). Our economies are engrained, not because of a threat of war, but because of a mutual reliance, and like the EU, this is what is going to drive our two economies forward in the next 50 to 100 years.
  • Positivity is not a state of mind; it’s a states, plural, of mind. One of knowing where you’ve been and another of where you are today. Draw a line between these two chronological points in time and if it’s ascending, that is, things are better today than they were yesterday, then a positive attitude eschews. So, it’s easy to see that even though the Chinese live in a world with reduced freedoms, such as the one child policy, censored news and internet, and freedom of speech, they are positive towards their standing because things are looking up.
  • Gordon Chang wrote the book ‘The Coming Collapse of China’. In 2001, he predicted that China’s economy would collapse by the middle of the 2000s. The reason, corruption and extended credit in the banking section – this coming from an American – makes the book even more comical. Clearly this was not the case, and China has surpassed both Chang’s and the world’s predictions. But I’d like to turn Chang’s book on it’s head slightly and suggest that it isn’t the coming collapse of the Chinese economy, it’s businesses or people, but rather the collapse of our easy ride, on the dragon’s back. What do I mean?At a recent British Chamber of Commerce event in Beijing that I attended, JamilAnderlini, the Beijing bureau chief for the Financial Times informed the audience that only 57% of British Chamber members are profitable. The title of his talk, ‘Is China Closed for business?’.His comments might not be just to sell papers. They might have some weight. For example, today China is the biggest exporter of capital, so who needs Foreign Direct Investment (FDI)?Coupled to this fact is the recent introduction of social insurance for foreigners, which Andelini calls a 'wealth distribution’. But then again, this could just be another case of a government apparatus operating without considering the stakeholders. Foreigners, the new law states, must pay social security tax, that includes monthly unemployment payments in the event that you are fired. However, since your visa is linked directly to your employer, once you no longer have an employer, you, by law, no longer have a valid visa and must leave the country. Receiving unemployment benefits when no longer living within China is a quandary. Some companies are
  • Joseph Joseph Wins Patent Case in ChinaGDA Staff -- Gifts and Dec, 4/10/2012 11:49:26 AMJoseph Joseph Index Cutting Boards.NEW YORK — Joseph Joseph won a two-year landmark case in China after a group of Chinese companies produced illegal copies of the kitchenware maker's Index Chopping Board. The companies also claimed to have designed and owned the brand long before Joseph Joseph.The two-year court case, which involved Ningbo John and its subsidiaries, ended in favor of Joseph Joseph and the key design of its Index Cutting Board. Ningbo John had unlawfully patented the Index Board in China three years ago and exported the product worldwide bringing in more than $40 million. The patent owned by Ningbo John was revoked.Founded by brothers Richard and Antony Joseph in 2003, the contemporary, and award-winning, designers said that there are still more infringers that need to be confronted moving forward, and the company has an in-house lawyer in place specifically for these cases."We're totally committed to fighting copies head on wherever they appear and are determined to win however long that takes," said Richard Joseph, managing director for Joseph Joseph, in a statement. "This case also forcefully demonstrates the necessity of fighting to the bitter end: if you really care about your brand name and design you fight until you win."
  • Discuss the issues of loop holes.Rule of ‘the man’ not rule of ‘law’ still in many instances.
  • Why are you here today?Well, It’s because of the problem, “You don’t know what you don’t know”. And you know this. That means, you realise that there is a lot going on in China, a lot of cultural differences, a lot of challenges, but also a lot of stuff that you couldn’t possibly know. Take, for example, the emergence of fake eggs, made of rubber, and fake walnuts, filled with concrete. You never thought of that, and why would you. Take for example, the fact that China now has the largest network of high speed rail, at around 13,000 km (to grow to 25,000 km by 2015), allowing a previous 5 hour trip between Shanghai and Nanjing, to be cut down to 1 hour and 19 minutes. In 2004, no high speed rail existed. The daily commute, factory locations, and cost of transport has changed dramatically. So where does that leave you? “Good judgement comes from experience. Experience comes from bad judgement.” And that’s why I propose that it’s best to learn from other’s experience. In this case mine.We have just watched a video from Edward Smith, and we will be watching more videos from Australian and international business professionals based in China.
  • Leadership training is hot in China. No doubt this is linked to Hewitt and Manpower’s research highlighting a leadership gap – a gap that isn’t expected to be filled until 2012 to 2014. Consequently, most firms acknowledge that developing, rather than hiring, talent is the way to go. But what skills are we currently developing in China’s future leaders, and are they relevant?In an essay titled ‘The Essence of Leadership’, Jonathan Byrnes, a Senior Lecturer at MIT, recently wrote for the Harvard Business School on the qualities of a great leader. His top eight qualities were: Capacity for passion, Perspective, Creativity, Organization skills, Teamwork, Persistence, Open-mindedness, and Integrity. These are all valid traits, but the team at ClarkMorgan Corporate Training wondered whether these qualities are at the heart at what motivates Chinese employees, and, just as importantly, can we apply a universal approach to leading Chinese?To answer those questions, ClarkMorgan conducted surveys across five cities in mainland China. Respondents in our survey originated from Beijing, Guangzhou, Shanghai, Shenzhen, and Tianjin, and all were white-collar workers from multinational companies. The differences between the Harvard Business School results and our own were startling.Cruel to be kind, in the right measureOf the 203 respondents in the survey, over 80 individual definitions of leadership qualities were recorded. Respondents were asked to nominate up to five leadership qualities, in either English or Chinese, and surprisingly two, almost opposing traits, came up on top. Caring/Considerate and Powerful/Authoritative, made up number one and two, respectively, suggesting that white-collar employees in China are looking for both a shoulder to cry on and a kick in the butt – but in the right measure. Some might say that this result in indicative of a culture that is highly respectful of the teacher’s role in society – one that often requires both the carrot and stick to get results. Nevertheless, the two qualities were absent in the Harvard Business School’s top eight, and are rarely found in common Western leadership texts.East does meet WestNumber three on the list of leadership qualities was vision/strategic. While Byrnes omitted this trait from his top eight, this trait is well documented in other authors’ “best of” list, including Stephen Covey and Ken Blanchard. This is where the East and West do appear to think alike. Successfully predicting the future has allowed companies to weather the Global Financial Crisis, when so many competitors failed. Mind you, many too were just plain lucky!Another trait common in both East and West thinking is Open Mindedness. While this is expected in the West, there is a clear sea change among Chinese employees who, only a generation ago, could be considered anything but open minded. But it appears that since China’s debutante, in 1979, a new culture that expects leaders to be open minded, especially within multinational company workforces, has developed. That’s a great sign for Hu Jintao’s call for innovation. Then again, this goal to move China away from the ‘factory of the world’ into one focusing on ‘value added’ commodities and a strong service industry, particularly in finance and banking, could result in some challenging side effects, particularly in relation to political reform.A changing in tradition?Interestingly, some of China’s traditional values were low down on the list. ‘Diligent’ just made it into the top 40, and ‘humility’, was out of the top 50. This was a very interesting result, as while both qualities are no doubt important, a lot of foreign text books on China may be attaching too much importance to these two qualities.What is clear is that the recent ClarkMorgan findings on the top 10 qualities of a leader differ significantly from the Western MBA doctrine. And this is why this research, along with other survey findings, are added to ClarkMorgan training courses. That keeps our training course China-focused and 100 percent relevant!
  • We surveyed 206 Chinese white collar workers, from multinational companies, located in Tianjin, Beijing, Shanghai, Shenzhen and Guangzhou and asked them:“What are the 5 qualities of a great leader”Notice, that we didn’t ask, “what are the qualities of your leader?” or “what are the qualities of a leader in China?” We wanted to think very openly about the leadership that they want to experience, no matter where they are or were, since many Chinese are ‘returnees’ where they may have worked overseas. Consequently, we didn’t want them to overlook leadership qualities that they appreciated outside of China.As you can see from this this bar chart, the two most common traits in a leader were ‘compassionate’ and ‘authoritative’. In many ways, these are bi-polar qualities, which makes it extremely difficult for one person to display, simultaneously. Rather, it looks like Chinese look to their leaders to be a kind of teacher – tough and caring at the same time. This is reflected in the current PRC government leadership, with WenJiabao being referred to as compassionate with his nickname of ‘Uncle Wen’, and the tougher and rigid Hu Jintao. The two are a perfect pair – according to this research. Only two qualities from the Harvard Business School list were similar.Perspective = vision?Open-mindedness = Open MindedI believe one other lesson to be gained from this list, is number six, ‘intelligent’. Being the smartest person in the room is not necessary for Western leaders. They surround themselves with experts, and their effectiveness is more linked to the ability to balance judgements. However, in China, leaders are expected to be the ‘most’ intelligent in the room, which can lead to some obvious problems, since one person couldn’t know everything. Nevertheless, many Chinese leaders, fearing a loss of face for not knowing, will delay their response or worse, guess. Rather than turning to others in a boardroom to gain their input, the quality of ‘intelligence’ increases the possibility of error and decreases the efficiency of decision making. And since ‘decisive’ is number ten in the list, the chance of guessing is even more likely!
  • I was standing in the Rio Tinto boardroom on the day Stern Hu was sentenced to 14 years jail.Hu, who shares his surname with the Chinese Chairman, Hu Jintao, received 10 years jail for receiving bribes (AU$946,300)and stealing State secrets. He is an Australian citizen. (total $14 between the 3 staff and him).In 2010 Pi Qiansheng, the “King of Tianjin’was found guilty of acceting bribes of around US$1.13 and sentenced to death with a two-year reprieve. “He worked here for so long. It was just a matter of time before he fell”– unknown source.
  • What is the difference between us, and emerging markets like China?‘Hardware’ and ‘software’. Rote learning Steven Hankin of McKinsey & Co, back in 1997670 executives in China 73% stated that it would still be tough to recruit top talent, citing ‘skills shortage’ One of the earliest reforms in the Deng Xiaoping era was the reopening of China’s universities, which had been closed during Mao’s Cultural Revolution; the World Bank’s first loan to Deng’s China was to support various aspects of higher education. So in the early 80s the universities reopened, but the Compulsive Thinking Disorder of the past survived the purge, and today rote learning continues on in classes as it has done for thousands of years. Unique Talent ChallengesThe War for Talent was first coined by Steven Hankin of McKinsey & Co, back in 1997. Hankin was originally referring to the demographic shift, primarily in Europe and the US, as retirees outstripped new, and qualified, recruits. However, while China is in a war of its own, it is not the ageing population that is the cause – most Chinese retiring today grew up when relationships, not computer skills, determined career advancement. Instead, it is enormous economic growth coupled to the mismatch of Chinese education and international business acumen. The cultural phenomenon of rote learning, a focus on grades before experience, and a society that is only now realising the importance of innovation has caused this mess. So much so, that while 6.6 million university graduates entered the workforce in 2011, Hudson reported that of 670 executives in China 73% stated that it would still be tough to recruit top talent, citing ‘skills shortage’ as the top challenge.This kind of news is terrifying for Australian and Asia-Pacific HR directors who have the mission to build a workforce linked to a China expansion strategy. But then again, nothing in China is easy, so why should recruitment be any different? Operation directors complain of poor quality, sales directors complain of corrupt buyers, and finance directors complain of erratic changes to taxation and reporting legislation. All this ‘ma fan’ (Chinese for ‘trouble’) is just the barrier to entry. The proverbial ‘toll you must pay’. Accept it, and focus on building a competitive edge – talent attraction.The steps to recruitment building a talent pipeline in ChinaSince you will probably be hiring a large bulk of your staff within the youth market, it’s important to understand how they tick. You might be surprised. In 2011 The MRI China Group conducted a survey, which included 2,265 Chinese aged between 25 and 37. One question that drew considerable attention was ‘Why do you choose to remain in your company?’ The top three answers were:Career developmentTeam camaraderieWork-life Balance‘Pay’ was not in the medal rankings.Asked what attracts them to a job, a separate study by Aon Hewitt on a similar Chinese demographic reported (as one, two, three):L&DCompany reputationCareer opportunities Again, no mention of salary within the top three motivators.This should come as a shook for anyone who has spent time in China over the past 10 to 15 years, since job hopping, over the barest of salary rises, were commonplace amongst white-collar workers. Unfortunately, those job-hoppers are still prevalent, only this time it’s less over pay and more over maintaining a 40 hour work week and being home for dinner.Aon Hewitt’s report, while supporting the research of MRI, is also a reminder that a strong employer brand is beneficial to increasing the access to talent – 20% more by some accounts. But what’s more interesting is the move away from multinational companies towards some unexpected benefactors. In 2010 the Chinese English language newspaper, Global Times, reported that while “just 10 years ago, only about 2,000 university students joined the People's Liberation Army (PLA) each year” that number in “last winter's intake was more than 130,000 university students”. To paraphrase, just ‘being foreign’ is no longer enough. Now, not only do Australian brands need to compete against the Global 1000 companies for top quality staff, but local government and State-Owned Enterprises are now taking a chunk of the talent.  But smart (and that means tech-savvy) companies need not fret. They understand that nowhere is there a bigger internet penetration than China, with 384 million active users – an irony, that is not lost on many, who complain of internet censorship. But while Facebook, Twitter and Youtube (amongst a growing list of around 2,600 sites) are blocked in China, there are home-grown SNSs (that’s ‘geek-speak’ for Social Networking Sites) that are ideal platforms to connect to your potential employees and build a strong employer brand. SinaWeibo and TencentWeibo are Twitter copies, and Kaixin and RenRen both mirror Facebook. While LinkedIn isn’t blocked (although it’s had its ups-and-downs in the past), it also has a decent Shanghai-born competitor called Ushi. LinkedIn boasts around 1.5 million active users in Mainland China, compared to Ushi’s 700,000. However, Ushi’s founder, Dominic Penaloza, boasts that half of LinkedIn’s China-based numbers are expatriates, and they are not growing. Ushi, by contrast is predicted to “hit three million users in China within a year”. That’s why Australian businesses are recommended to add ‘social media expert’ to all HR job descriptions.
  • Chinese expect customisationCost of hire is growingAutomation is becoming common placeInefficiencies are no longer toleratedBusiness Challenge With numerous locations across the nine country region, Kimberly Clark needed visibility into each market’s recruiting activities as well as talent pooling capability. Kimberly Clark knew the solution would only work if we could ensure regional adoption and PageUp People gave them the flexibility to incorporate the local languages and hiring methodologies that each region needed Solution In just under eight weeks from contract to deployment, PageUp People activated the enterprise recruiting system across the nine countries, and six languages, including English, Thai, Vietnamese, Bahasa (Indonesean), Chinese and Korean. To alleviate the challenges generally faced by employers when operating in high-growth markets, PageUp People utilized its scalable global recruitment gateway interface that allows employers to configure the system to accommodate local process and language preferences while maintaining compliance with corporate policies and create localized talent pooling to rapidly fill positions.The new global recruitment gateway system provides Kimberly Clark with continuity of recruiting processes, data security and talent pooling while allowing the flexibility to map to the specific regional requirements used across nine Asia Pacific countries. Key Takeout PageUp People has a long-standing history of helping large multinational companies address their talent management challenges with relevant solutions such as global recruitment gateway that help them grow into emerging markets. This depth of experience makes PageUp People uniquely qualified to support leading employers like Kimberly Clark in these regions, and in particular high growth markets such as China About PageUp PeoplePageUp People helps multinational employers improve talent management practices across borders, business units, cultures and languages, to maximize the strategic value and business impact of their talent resources. With its comprehensive, SaaS-delivered solution for Talent Management, PageUp People unifies Recruiting, Performance, Compensation, Development, Career Planning, Succession Management and Workforce Analytics, to give employers company-wide visibility to talent resources and executive-level, predictive analytics for intelligent decision making. Underpinned by a comprehensive capabilities framework, PageUp People Talent Management supports more than 90,000 users in over 180 countries.PageUp People solutions support multinational organizations from a broad range of industries, including financial services, retail, mining and refining, transportation and telecommunications. PageUp People is headquartered in Melbourne, Australia with additional office locations in Sydney, London, Shanghai and Atlanta. Learn more about how PageUp People can help transform your organization’s multinational HR initiatives by visiting www.pageuppeople.com.
  • In comparison, that’s
  • Weibo = TwitterRenRen,Kaixin = FacebookQQ = MSNBaidu = GoogleNetease = Yahoo
  • I’m a Zombie fan.So much so, that back in my early 20s I wrote, directed and stared in my own movie – ‘The Dead Will Rise’. Pig brains and a VHS video camera were the only expense, and while the movie did run up to 45 minutes and receive an A+ for my co-producer’s high school project, it never saw the big screen. It never received an AFI, BAFTA or Oscar award, but it did instill a passion for the genre.Now I’ve learnt about another type of zombie. This time not on celluloid, but online. These zombies, or 僵尸粉, are more sinister because they are beginning to invade our real lives.Internet Zombies are fake Weibo accounts, the Chinese Twitter, used to boost egos and brand credibility. For as little as 5 RMB a Weibo account can gain 1,000 ‘fans’. For 120 RMB, 5,000 fans, equipped with personalities – followers, a history of posting, a profile photo and personal description – can adorn a user’s account. Deceit or simply a cry for cry for attention?One Beijing based recruitment firm, a recent start-up, has jumped from a few hundred fans in 2011 to boasting over 31,000 fans in March of 2012.  In comparison, the founder’s previous company, Antal International, which has been in the market since 1993 has only 1,400 fans.Of course a crowd draws a crowd, and this is probably the strategy for this start-up, who are in the recruitment business after all,  where volume is important and a looking ‘new’ wins no awards.  Innocent ego tripping, you might say. But when established brands hire the services of marketing and PR agencies in China, to help boost their brand’s awareness, not ego, internet zombies are useless, and may be detrimental to the brand.Take the case of a Norwegian Salmon company, which was pleasantly surprised when their contracted PR company was able to attract over 100,000 fans to its corporate Weibo account. Clearly, Chinese netizens who had ‘fanned’ the Norwegian Salmon company were passionate about their fish, and so it made sense to run a competition to further engage their fan base. This time, when they were surprised, it wasn’t pleasantly. Only 4 fans responded – a pathetic 0.004% response rate, and evidence that most of the fans had been bought.Domestic companies are also not immune to such deception.HaomenJipin Abalone Restaurant in Shuozhou, in Shanxi province, announced a promotion in cooperation with chinamil.com.cn, a website sponsored by the PLA Daily. In an advertisement posted on the company’s Weibo account in late September, the restaurant asked for fans to “Tell us your feelings about seeing the launch of the spacecraft Tiangong-1.” Whoever forwarded the message the most, the advertisement declared, would win an iPad or iPhone. The contest would end by October.Subsequent inquiries indicate spam software was employed to run up the numbers, so much so that by October 7th, the last day of the competition, the initial posting had been reposted or forwarded on SinaWeibo 13 million times. This was a Chinese record. Unfortunately it wasn’t marketing genius – it was simply a façade. SinaWeibo reported that only 3,000 participants in the online promotion were subscribers with real profiles. And the message was actually posted and reposted only 9,000 times, not 13 million. The suspect accounts have since been banned. All this deceit has damaged both the reputation and usefulness of microblogging as a marketing tool in China. In a country where loop holes are quickly exploited, it is also a reminder that without checks and balances between departments and suppliers zombies might infiltrate your best ethical barriers and run amok with your brand.
  • I’m a Zombie fan.Aged barely in my teens, the organisers of the Scout bike hike inadvertently hired ‘Return of the Living Dead’for some 100 or so scouts who were camped out in a hall, surrounded by forest, not unlike the movie’s own setting. Needless to say, no kid snuck out for a smoke that night. This passion for zombie movies has continued, even culminating into my own B-grade movie – The Dead Will Rise – filmed in the suburbs of Glen Waverley, and utillising pig brains and a VHS video camera. It got an A+ for media studies, but was ignored by the AFI award judges.But that is where my love of Zombies stop.You see in China, there are a more sinister type – the internet Zombies. Internet Zombies are fake Weibo account, used to boost egos and brand credibility. For as little as 5 RMB a Weibo account can gain 1,000 ‘fans’. For 120 RMB, 5,000 fans with personalities – that is their own followers, a history of posting, a profile photo and personal description – can adourn your Weibo account.So which type of companies are engaged in this deceit.RMG Selection, is a start up in Beijing which went from 150 fans in 2011 to over 31,000 by March 2012. In comparison, the founder’s previous company, Antal International, from which he split, has currently 1400 fans. Of course a crowd draws a crowd, and this is probably the strategy for RMG, who are after all a recruitment firm, where volume is important, and a Start up wants to look anything but.But when established brands hire the services of marketing and PR agencies in China, to help boost their awareness, not ego, Zombies are useless, and often detrimental to the brand.Take the case of a Norwegian Salmon company, which was pleasantly surprised when their contracted PR company was able to attract over 100,000 fans to its corporate website. Clearly, Chinese netizens who had ‘fanned’ the Norwegian Salmon company were passionate about their fish, and so it made sense to run a competition to further engage their fan base. This time, when they were surprised, it wasn’t pleasantly. Only 4 fans responded - 0.004%. Domestic companies are not immune to such decption. HaomenJipin Abalone Restaurant in Shuozhou, in North China's Shanxi province, announced a promotion in cooperation with chinamil.com.cn, a website sponsored by the PLA Daily, a newspaperof the Chinese People's Liberation Army. In an advertisement posted on the company’s Weibo account in late September, the restaurant asked for fans to “Tell us your feelings about seeing the launch of the spacecraft Tiangong-1.”Whoever forwarded the message the most, the advertisement declared, would win an iPad or iPhone. The contest would end by October.Subsequent inquiries indicate spam software was employed to run up the numbers, so much so that by October 7th, the last day of the competition, the initial posting had been reposted or forwarded on SinaWeibo 13 million times. This was a Chinese record. Unfortunately it wasn’t marketing genius - it was simply a façade. SinaWeibo reported that only 3,000 participants in the online promotion were subscribers with real profiles. And the message was actually posted and reposted only 9,000 times, not 13 million. Sina has since banned the suspect accounts.So what can we learn from the Norwegian Salmon and Abolone Restaurant. Simply put, loop holes are quickly exploited in China, and you must maintain checks and balances, and promote transparency within and between your departments and suppliers.
  • Business Challenge With numerous locations across the nine country region, Kimberly Clark needed visibility into each market’s recruiting activities as well as talent pooling capability. Kimberly Clark knew the solution would only work if we could ensure regional adoption and PageUp People gave them the flexibility to incorporate the local languages and hiring methodologies that each region needed Solution In just under eight weeks from contract to deployment, PageUp People activated the enterprise recruiting system across the nine countries, and six languages, including English, Thai, Vietnamese, Bahasa (Indonesean), Chinese and Korean. To alleviate the challenges generally faced by employers when operating in high-growth markets, PageUp People utilized its scalable global recruitment gateway interface that allows employers to configure the system to accommodate local process and language preferences while maintaining compliance with corporate policies and create localized talent pooling to rapidly fill positions.The new global recruitment gateway system provides Kimberly Clark with continuity of recruiting processes, data security and talent pooling while allowing the flexibility to map to the specific regional requirements used across nine Asia Pacific countries. Key Takeout PageUp People has a long-standing history of helping large multinational companies address their talent management challenges with relevant solutions such as global recruitment gateway that help them grow into emerging markets. This depth of experience makes PageUp People uniquely qualified to support leading employers like Kimberly Clark in these regions, and in particular high growth markets such as China About PageUp PeoplePageUp People helps multinational employers improve talent management practices across borders, business units, cultures and languages, to maximize the strategic value and business impact of their talent resources. With its comprehensive, SaaS-delivered solution for Talent Management, PageUp People unifies Recruiting, Performance, Compensation, Development, Career Planning, Succession Management and Workforce Analytics, to give employers company-wide visibility to talent resources and executive-level, predictive analytics for intelligent decision making. Underpinned by a comprehensive capabilities framework, PageUp People Talent Management supports more than 90,000 users in over 180 countries.PageUp People solutions support multinational organizations from a broad range of industries, including financial services, retail, mining and refining, transportation and telecommunications. PageUp People is headquartered in Melbourne, Australia with additional office locations in Sydney, London, Shanghai and Atlanta. Learn more about how PageUp People can help transform your organization’s multinational HR initiatives by visiting www.pageuppeople.com.
  • Watch the following video, and then tell me why they were banned.
  • Why was this advertisement banned?
  • It was one of a series of incidents in 2004 in which Western and Japanese companies apologized to Chinese consumers for their advertising. In December, Nike apologized for a television commercial featuring NBA player LeBron James that had to be taken off air after a ban imposed by the State Council. The ban said that the commercial had violated Articles 6 and 7 of the Guidelines for the Management of Television Advertising, which say that “television advertising should protect the dignity and interests of the state and respect the traditional culture of the Fatherland” and “may not defame national customs and lore”. According to an article on the website of the Chinese Communist Party’s flagship People’s Daily, this was a response to complaints by viewers who accused the ad of showing “American culture defeat Chinese culture” or even of defaming China. The commercial showed NBA player LeBron James fight and defeat two Chinese-looking figures – an old wizard and a female fighter – and two dragons. The article included a sampling of netizens’ opinions, some of which condemned the advertising, while others charged these with excessive sensitivity. The tone of the article was set by an “expert”, a professor of advertising at China Media University, who figured that the offensive advertising was not the result of malicious intent but of cultural ignorance, and called for more regulations to curtail what he called “blind and excessive creativity”. The article recalled that a previous pair of Toyota print advertisements encountered similar protests and resulted in an apology by the company. In one of the ads, two Chinese stone lions salute the Prado four-wheel drive as it passes by (selling line: “Prado – You Can’t Help Respecting It”), while in the other, a Land Cruiser tows a stalled Chinese-made Dongfeng military lorry in a mountain wilderness. (Coincidentally or not, the brand name Prado has been translated as “Badao,” meaning “hegemony” or “dictatorship,” in Chinese.)
  • Business Challenge With numerous locations across the nine country region, Kimberly Clark needed visibility into each market’s recruiting activities as well as talent pooling capability. Kimberly Clark knew the solution would only work if we could ensure regional adoption and PageUp People gave them the flexibility to incorporate the local languages and hiring methodologies that each region needed Solution In just under eight weeks from contract to deployment, PageUp People activated the enterprise recruiting system across the nine countries, and six languages, including English, Thai, Vietnamese, Bahasa (Indonesean), Chinese and Korean. To alleviate the challenges generally faced by employers when operating in high-growth markets, PageUp People utilized its scalable global recruitment gateway interface that allows employers to configure the system to accommodate local process and language preferences while maintaining compliance with corporate policies and create localized talent pooling to rapidly fill positions.The new global recruitment gateway system provides Kimberly Clark with continuity of recruiting processes, data security and talent pooling while allowing the flexibility to map to the specific regional requirements used across nine Asia Pacific countries. Key Takeout PageUp People has a long-standing history of helping large multinational companies address their talent management challenges with relevant solutions such as global recruitment gateway that help them grow into emerging markets. This depth of experience makes PageUp People uniquely qualified to support leading employers like Kimberly Clark in these regions, and in particular high growth markets such as China About PageUp PeoplePageUp People helps multinational employers improve talent management practices across borders, business units, cultures and languages, to maximize the strategic value and business impact of their talent resources. With its comprehensive, SaaS-delivered solution for Talent Management, PageUp People unifies Recruiting, Performance, Compensation, Development, Career Planning, Succession Management and Workforce Analytics, to give employers company-wide visibility to talent resources and executive-level, predictive analytics for intelligent decision making. Underpinned by a comprehensive capabilities framework, PageUp People Talent Management supports more than 90,000 users in over 180 countries.PageUp People solutions support multinational organizations from a broad range of industries, including financial services, retail, mining and refining, transportation and telecommunications. PageUp People is headquartered in Melbourne, Australia with additional office locations in Sydney, London, Shanghai and Atlanta. Learn more about how PageUp People can help transform your organization’s multinational HR initiatives by visiting www.pageuppeople.com.
  • In March of 2009, only two weeks before the event, we met with a report from Sina.com.We had been introduced by a PR and marketing company, a Shanghai registered company, but partly owned by an American. The task was simple. Line up two interviews with Chinese internet portals, Sina.com and Soho.com“Never pay the media. Instead, pay the PR firm who pays for the media.”
  • Chinese Esquire magazine Bang and Olfsen to print the ofllowing
  • Bentleigh event – 3 Bentleighs or more, Teun attended
  • Price is no longer the number one reason why Chinese make decisions. It wasn’t always this way, but it is today.How do I know this? Take Starbucks. A Venti Latte, that’s Starbucks speak for a big coffee, is 5.70 USD in China, but only 3.70 USD in the United States. What’s more, lots boutique and branded coffee shops, such as Mr. Donut, have opened up selling coffee at almost half this price. But never-the-less Starbucks is incredibly popular and is only growing. Said CCEO Howard Schultz "the No. 1 opportunity" for the company is in China. Starbucks says China will become its second largest market outside the U.S. by 2014, and it will have more than 1,500 stores in more than 70 cities by 2015.”He then left the audience to have a private meeting with President Hu Jintao, who has supplemented his tea habit with that of coffee. The Hunan government website even reported Hu as saying, if he had time, he’d love to visit a Starbucks in Beijing.” Clearly a great sign of respect, although no Chinese expect Hu to be ordering his own MoccaFrapachino anytime soon. The media frenzy generated when US Ambassador to Beijing, John Locke, although you may not see him Bentleigh event – 3 Bentleighs or more, Teun attended
  • We surveyed 206 Chinese white collar workers, from multinational companies, located in Tianjin, Beijing, Shanghai, Shenzhen and Guangzhou and asked them:“What are the 5 qualities of a great leader”Notice, that we didn’t ask, “what are the qualities of your leader?” or “what are the qualities of a leader in China?” We wanted to think very openly about the leadership that they want to experience, no matter where they are or were, since many Chinese are ‘returnees’ where they may have worked overseas. Consequently, we didn’t want them to overlook leadership qualities that they appreciated outside of China.As you can see from this this bar chart, the two most common traits in a leader were ‘compassionate’ and ‘authoritative’. In many ways, these are bi-polar qualities, which makes it extremely difficult for one person to display, simultaneously. Rather, it looks like Chinese look to their leaders to be a kind of teacher – tough and caring at the same time. This is reflected in the current PRC government leadership, with WenJiabao being referred to as compassionate with his nickname of ‘Uncle Wen’, and the tougher and rigid Hu Jintao. The two are a perfect pair – according to this research. Only two qualities from the Harvard Business School list were similar.Perspective = vision?Open-mindedness = Open MindedI believe one other lesson to be gained from this list, is number six, ‘intelligent’. Being the smartest person in the room is not necessary for Western leaders. They surround themselves with experts, and their effectiveness is more linked to the ability to balance judgements. However, in China, leaders are expected to be the ‘most’ intelligent in the room, which can lead to some obvious problems, since one person couldn’t know everything. Nevertheless, many Chinese leaders, fearing a loss of face for not knowing, will delay their response or worse, guess. Rather than turning to others in a boardroom to gain their input, the quality of ‘intelligence’ increases the possibility of error and decreases the efficiency of decision making. And since ‘decisive’ is number ten in the list, the chance of guessing is even more likely!
  • So what are the top five KPIs that you should be applying to your sales team? The following list is based on my 10 years of leading Chinese across the country, and making a ton of mistakes in that process! These five qualities now feature on posters on the walls of all my four offices. What are they? Here we go!
  • I am amazed at how little some salespeople know about the products and services that they sell. Mind you, because I am in sales, I tend to quiz service staff more than the usual customer, and generally I am unimpressed. That’s not to say that sales ability in China hasn’t improved over the 9 years that I have lived here. It’s just nowhere near international standards quite yet.That means, if you manage a sales team in China, conduct regular service and product knowledge tests with your team. Don’t assume that they know as much as you do, so find out. A simple pop quiz this Monday will prove me right or wrong about their ability.
  • Goodwill is vital in sales. I’ve heard that it occupies as much as 37% of the pie, in terms of a successful sale, and while I am sure this percentageg changes with each contract, there is no doubt that it is important.Unfortunately, charisma is not easily learnt – although, I do believe it can be. Ever heard of a shy salesperson? Unlikely, and yet many great salespeople started off in their lives as shy. They grew out of it, and grew into their charisma, most likely by mirroring others around them.
  • Every good salesperson knows that to win business you need to first build trust. That trust is built with the combination of reputation and goodwill. Most of the responsibility for reputation falls on marketing's shoulders, leaving goodwill in the hands of salespeople. For China, salespeople reach extraordinary levels of ass kissing, known as 'pa ma pi'(拍马屁). To many, including myself, this simply appears as conspicuous flatter. But never-the-less, this communication style is important to cultures where 'face' (面子) is deeply ingrained in the culture, such as China, Japan and Korea. However, this style can backfire when dealing with customers who are less externally motivated (ie. praise and respect) and more internally motivated (ie. KPIs and self development). Take a meeting I had in the southern city of Shenzhen some years ago. Emily, a Chinese colleague and I arrived at the ground floor of the Futian office building on a sunny Spring day. We were 15 minutes early, but decided to go up to the client's floor anyway. A minute passed, as we stood in front of the bank of elevator doors, and then the door directly ahead opened. Inside stood a foreigner, who I immediately stereotyped as English, with his hair cut, complexion and habit of smoking. You see he had a cigarette in one hand as he took a step forward. We made eye contact and simultaneously clicked that we were scheduled for a meeting."Morry?" said Peter."Yes. Peter?" I responded."Great. I was going to have a fag, but let's go up to my office," responded Peter, his accent and use of colloquialisms confirming my English assumption.All three of us stepped into the elevator, and Peter pressed '20'. As the door slid to a close, he turned to me and asked."Are you from Australia?""Yes. Melbourne actually."And then Peter said something that you'll never hear coming from a Chinese client, or any culture that isn't 'mismatching'."That's a pity!" stated Peter, bluntly.That's right. Knowing me for only seconds, Peter had thrown an insult. Emily looked shocked.Her shock grew when she heard my reply."Oh, it get's worse! My mother is from England!" *BAM!*My reaction has been measured but instinctive. I recognised Peter as a 'mismatcher' - simplistically put, somebody who enjoys finding the differences, rather than focusing on similarities. He verbally slapped me, and I verbally slapped him back. And all the while Emily stood in shock. In her mind this contract was lost, even before we hit the twentieth floor. "Morry, what are you doing!" she was screaming in her mind.But Peter was smiling, and when the door for the floor opened he slapped me firmly, but with respect on my shoulder, leading me left towards his office.The contract was signed on the day even though Emily still didn't know what was going on. She was introduced to mismatching communication style, and one endemic to the Australian and English cultures. Should you start every meeting with Australians or English with an insult? Of course not, but be aware that this is how some people build goodwill. It's backwards, but more common than you might think. Just remember to always complement your insult with a smile.
  • In my book, ‘Selling Big to China’, I highlight the importance of uncovering needs, and the method in which these needs can be uncovered. This technique is called funelling and unfortunately, again, few salespeople have been taught this invaluable skill. Luckily I learnt it early into my career (13 years ago). In a nutshell, it involves first asking open non-leading questions, followed by open leading questions, and finally closed leading questions. Interspersed between the questioning you summarise what the client has said, and therefore clarify your understanding, while building goodwill through the use of positive language.
  • In China, many people believe that guanxi is vital to be a great salesperson. I disagree. Guanxi will get your career started, but two years later, if you don’t have the quality of persistence to gain new business then you would have dried up all of your connections.At ClarkMorgan we measure this quality in the form of the Quality Score. This record measures the amount of smart legwork that our salespeople are making and given them a running total based on 30 days. It’s a requirement that all sales staff maintain a Quality Score of 1000 points or more, and they achieve this by e-mailing (1 point), making phone calls (5 points), attending networking events (15 points) and having face-to-face meetings (20 points). 1000 points shouldn’t be difficult to maintain, as it is only 50 points a day (50 x 21 working days a month). It is easy to see which salespeople will excel, and who will bomb-out, from this metric. 
  • And finally, sales staff not only have to get their clients signature on the dotted line, they also need to follow through with their promises. Any gap between promise and delivery will damage the probability of repeat business, and will all know that it costs 5 to 20 times more to secure new business than simply maintaining a pool of delighted customers.
  • Perpetual Motion
  • What is your China strategy?

    1. 1. WHAT IS YOUR CHINA STRATEGY?
    2. 2. Censorship Self Censorship Media Censorship Government Censorship
    3. 3. Stereotypes Cuisine Scholastic Competition Driving
    4. 4. Loopholes My Chinese Wife
    5. 5. CONTENTS Macroview Microview Corruption HR Marketing Sales Perpetuity
    6. 6. What is the ChineseMACROVIEW
    7. 7. Trade
    8. 8. A positivecountry?
    9. 9. Top 10 issues in China in 20111. Soaring commodity prices (59.5%)2. Health care availability and prices (42.9%)3. Income and wealth gap (31.6%)4. Government corruption (29.3%)5. Unemployment (24.2%)6. House prices (24%)7. Retirement pension for the elderly (16.6%)8. Food safety (15.9%)9. Education Costs (10.9%)10. Environmental Pollution (10.3%) Source: Chinese Academy of Social Sciences
    10. 10. It couldhave beenmuch worse
    11. 11. Laws arebeginning to stick
    12. 12. Why are you here today?
    13. 13. Topics most commented on
    14. 14. What is the ChineseMICROVIEW
    15. 15. What are the top 5leadership qualities?
    16. 16. Capacity for passionPerspectiveCreativityOrganization skillsTeamworkPersistenceOpen-mindednessIntegrity Jonathan Byrnes, a Senior Lecturer at MIT, writing for the Harvard Business School
    17. 17. Who is the perfect leader? Percentage (%) of Respondents 16 14 indicate important 12 10 8 6 4 2 0 QualitiesClarkMorgan “Leadership Quality Survey 2010” – 203 respondents
    18. 18. How relevant in China isCORRUPTION
    19. 19. Case Study Stern Hu Chen Liangyu Pi QianSheng Bo Xilai
    20. 20. What you need to know aboutHUMANRESOURCES
    21. 21. “China has the lowestengagement (17%) andhighest disengagement(29%) of all regionssurveyed globally. ” - BlessingWhite 2010/2011 Global Employee Engagement Research
    22. 22. “ Mexico ranked highest (75.8%) and China ranked equal third last (63%) ” alongside the UK. - Hay Group employee engagement index
    23. 23. MRI Aon vs. Hewitt New Challenges Learning & DevelopmentTeam Camaraderie Company Reputation Work/Life Balance Career Opportunities Source: Network HR
    24. 24. “China costs more thanthe average worker inany other emergingAsianeconomy, excludingMalaysia andThailand, whenconsidering in terms ofcombined salary andwelfare payment.”- Chris Devonshire-Ellis , China Briefing
    25. 25. “The Chinese robotmarket is currentlygrowing at an annualrate of about 30%.China will take thelead amongindustrializedcountries withprojected sales of30.000 units in 2014.”- Wolfgang Heller, Infonaut AB
    26. 26. Case Study Kimberly Clark
    27. 27. What you need to know aboutMARKETING
    28. 28. 879,000,000mobile phone users in China Source: China Internet Watch
    29. 29. 457,000,000 internet users in China “98% is broadband!” Source: China Internet Watch
    30. 30. 303,000,000Mobile internet users in China Source: China Internet Watch
    31. 31. Chinese aged18 to 27 spend almost 5 hours every dayon the web or e-mail Source: China Internet Watch
    32. 32. 58% vs. 17%of Chinese spend of Chinese spend 33 hours each day hours each day on on the internet watching TV Source: China Internet Watch
    33. 33. In 2010, Taobao transactions totalled60 billion USD (same as total trade between Australia and China) Source: China Internet Watch
    34. 34. = == == =
    35. 35. What are internet zombies?
    36. 36. Topics most commented on
    37. 37. Antal International RMG Selection Founded 1993 Founded 20101440 FANS 31,000 FANS
    38. 38. Case Study Norwegian Salmon
    39. 39. Norwegian Salmon Company100,000+ FANS 4 replies
    40. 40. Why are the followingadvertisements illegal?
    41. 41. Can the media be bought?
    42. 42. Case Study Spark09
    43. 43. Esquire and Bang & Olfsen
    44. 44. What you need to know aboutSALES
    45. 45. Venti Latte Venti Latte$5.70 USD $3.70 USD
    46. 46. US Ambassador Gary LockeReposted 28,000times on Weibo
    47. 47. Do you know your Chinese customer? 95 % Expected management hires China 90 AP Average 85 80 75 70ClarkMorgan “Leadership Quality Survey 2010” – 203 respondents
    48. 48. What are the top 5 sales qualities?
    49. 49. Top 5qualitiesof yoursalesforce
    50. 50. ProductKnowledge
    51. 51. Ability to buildgoodwill
    52. 52. Ability touncoverneeds
    53. 53. What are your Needs?
    54. 54. What are the needsof Chinese?
    55. 55. Legwork “He means „Checking‟!”
    56. 56. Followingthrough/upon promises
    57. 57. How do you buildPERPETUITY

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