1) To be successful in China, managers need qualities like humility, strength, patience, speed, and the ability to build guanxi (relationships). 2) When selecting expat employees, companies should choose those with strong knowledge and experience, a sense of adventure, and a good sense of humor. 3) Entering the large Chinese market requires commitment, patience, a focus on high volumes for cost advantages, speed, the right technology, and initially targeting the Chinese market over exports.

1. Managing in China
Based on some books and my own
experience
A M Choudhari, COO, L&T
(China)
March 2010

2. Qualities of successful manager
in China
• Humility
• Strength
• Patience
• Speed
• Guanxi (Relation) building

3. Qualities of successful manager
in China
• Employees will respect, if you bring knowledge and
skill
• Select expats with rock solid knowledge and
background
• Earlier expat experience preferred
• Select person who is adventurous, open minded and
with sense of humor
• Do not force your point of view.
• Do not say, I am an expert, I know every thing
• Do not say, we do it this way in our country
• Be humble and avoid authoritarian style
• Be unyielding and defend corporate values and culture
• Be patient, go step by step
• Be flexible and quick
• Build Guanxi with employees, customers, suppliers,
government officials

4. Requirements for a company
venturing in China
• Scale: High volume game. Only then can you get cost
advantage.
• Speed: No, to procrastination from head quarters.
• Focus: Typical Chinese understands one requirement
at a time. Do not expect multiple initiatives from
single person.
• Management commitment: Do not enter China for “No
harm in trying” thinking.
• Patience: Establishing business in China requires time
but the patience ultimately pays.
• Technology: Venture in China only if you have
products or services better than Local Chinese
players and they meet China specific requirements.
• China market: Enter for Chinese market. Export can
be add on smaller business. Cost advantage is

5. Managing Chinese employees
• To the Chinese employees, the company is more
like a family
• Trust your subordinates and delegate
• They will work hard not for company but for you
• They like to have good relationship with Boss. Be a
boss, friend and teacher
• Avoid loss of face: If one is promoted but other is
not
• You may need to promote faster in China
• Training is valuable to Chinese

6. Working with JV partners
• Should have business experience and
character
• Use JV only when, the local partner
• Offers connections with authorities
• Market knowledge

7. JV partner selection tips
• Choose active value added partner
• Can contribute to company goals
• Bring insight into local business
• Establish operation
• Bring strong client base
• Skill at government negotiations
• Same bed but different dreams leads to
divorce
• Mearger or acquisition is better

8. Communicating with
headquarters
• Should not be out of sight out of
mind for HQ
• Give autonomy along with Code of
Ethics: HQ needs to understand that
Chinese style of working is different.
• Final stage is when China operations
become strategic partner with HQ

9. Communicating with
headquarters
• HQ realizes that China is a big
market but long term play.
• In China everything is difficult but
everything is possible.
• 1 or 2 top decision makers at HQ
should take interest in China
operations

10. Facing competitors
China – country of Just good Quality
• Chinese companies quickly replicate best product features along
with slashing prices
• For survival, the requisites are innovation, speed, flexibility,
marketing and tracking of consumer preferences
• Entire world is here. European, American, Japanese and local
companies compete. Saiichi kawasaki, President Sony, China
• Prices have moved down for foreign and up for Chinese players.
Extremely painful period of readjustment. Alen brown, Chairman,
unilever, china
• Chinese companies are trying fast to be like MNCs. So the
distinctions are going blur. John Wong, MD, BCG, China
• Avoid over engineering, over innovation. Offer quality and
functionality that matches demand. Don’t loose site of cost.
• Quality – Do not try High or Low quality.It should be Just sufficient.
• If you cannot fight them merge with them.

11. Facing competitors
• All the big guys are here. This is a dog fight. Dr. Garry Dircs.
BP China
• Fellow MNCs fight for,
• Government approvals
• Recruit and retain personnel
• Partnership alliances with locals
• Secure land, facilities, equipment and supplies
• Young, aggressive and unpredictable local players are now
more difficult to compete
• Local players indulge in unfamiliar, illogical and confusing
strategies which MNCs are unaware of
• Local companies have now a double edged sword. Improved
quality and lower cost
• MNCs, remain only at the high end market is no more a
sustainable strategy, as locals flushed with funds are quickly
acquiring technology

12. Facing competitors
• Huawei, Lenovo, Haier are some
examples of strong MNC competitors
• Sony maintains price at higher level
but continuously increases product
value by innovation.
• Many foreign players agree that there
is a “Squeeze” between quality and
price. Foreign products prices have
moved down whereas local products
have moved up.

13. One China many markets
• Many markets within China
• Developed - East
• Developing - Central
• Underdeveloped – West
• Different consumer groups
• Demographics
• Educational back ground
• International exposure
• GM
• North: Red colour preferred
• South: White colour preferred
• Unilever
• North: Moisturizing
• South: Smooth skin, freshness

14. Sky high demands
• Urban wealthy, sophisticated, price
conscious, fickle consumers demand
perfection, especially from MNCs
• Impossible expectations, expect 100%
perfection in cars
• Expectation of picture quality and colour
for TV is very high
• Don’t accept 2nd rate products
• 1st place to introduce new technology but
can get copied

15. Winning over Chinese consumers
• Chinese consumer expectations are more than even
Japanese. Phillip Murtaug, CEO, GM, China
• Chinese expectation for picture quality and product
design is more than Japanese. Saiichi Kawasaki,
President Sony China.
• Some times products are over designed for Chinese
market. People wont pay. Kenneth Yu, MD, 3M,
China
• 3M Sand paper
• 3M Adhesive tape
• While retaining international image and power of
your brand, localise your products to suit local
tastes and preferences
• Many cities are gaining rapidly in wealth and
consumerism. Second and third tier cities are

16. Choosing your destination
• Choosing the correct market in China is
tricky
• MNCs generally start with Bejing,
Shanghai, Gongzhou, Chengdu
• Up coming cities have growth potential and
less crowded playing field
• L’Oreal is launching its products city by
city
• Siemens strategy is 2 pronged
• Increasing presence in high density, upper end
• Pioneering into underdeveloped western China
•

17. Living in China
• Out of 20 top executives, no one (including heads of GE,
Unilever, Sony) hoped to leave China. Quality of work
experience was the primary reason.
• Expatriates enjoy life in China.
• The wives feel lonely and isolated, companies need to
take steps to help.
• While sending to China, assess candidates for soft skills
for adapting to different culture, language etc.
• Interview expatriates family members. Wife should be
equally open and flexible.
• Send family for Look-see visit to check on housing,
schooling, recreation, hospitals, office.
• Custimise benefits to choose those perks that are most
beneficial to them

18. China is a difficult market
yet too large to be ignored
All the best
A M Choudhari