Everyone is talking about China. But what do we really know?
Good insights and understanding are limited, especially about China’s role and impact in geopolitics and the global economy. This is an important knowledge gap that 21st century businessmen and marketers must close in order to ensure ongoing success.
With that in mind, we have an exclusive interview with an ex-pat business executive just back from living and working in Shanghai. It’s an inside look at lessons learned from doing business in China. Enjoy.
Interview with Greg Morency
Former Tate & Lyle Vice President, Food Ingredients, Asia Pacific
Greg Morency is a general management executive who has 25 years of global experience in the FMCG (fast-moving consumer goods) and B2B sectors, including ex-pat assignments in England and China. In September 2006, Greg, along with his wife and three children, moved from Illinois to Shanghai, China, where he established, managed and led Tate & Lyle’s Asia Pacific business unit. He and his family have just returned to the US. Contact: gregmorency at yahoo dot com
(Disclosure – Greg is a former Lipton/Unilever and Tate & Lyle colleague.)
What’s the biggest misperception Americans have about China?
Chinese consumers are quite savvy and exposed to much more in the way of international choices and influences than most Americans may perceive. The economy is vibrant and like other parts of the world, major cities in China are full of energy and are much more modern than most might expect. Many Americans may still associate China with the ideology and legacies of the 60s & 70s. In fact, the country has leapfrogged from those times, given its technology and huge economic investments.
You set-up an Asia Pacific business unit office in Shanghai. How should global companies think about doing business in China, and what’s your advice to companies thinking about setting up a foothold in China?
Do your homework. First validate that your business model will translate in China.
The market opportunities are truly great and significant revenue growth is attainable; however you do not have a right to succeed and the road is littered with successful companies and executives that believe they can show up and win based solely on what made them successful in other markets.
The market is quite dynamic, however what you may consider as basic market data is often hard to secure or may not be fully reliable so manage your expectations, and count on your ability to manage through ambiguity at some points. Be prepared to deal with setbacks and expect the unexpected.
Keep your MNC [multinational corporation] standards high. Be ethical and adhere to high standards of international laws and your respective MNC company policy. The Chinese customers with whom you likely want to do business will respect this.
Persistence will likely pay off to those who stay committed to the China market.
What’s the biggest mistake foreign companies make with their Chinese operations?
Assuming what works for companies in the West or other Asian countries can easily translate in China – not fully appreciating that Chinese values and ways of doing business are often different. Therefore, imposing the foreign way of working versus understanding how to best adopt and adapt for China would be a mistake.
In terms of expectations versus reality, describe your 4+ years in China?
As this was a startup and I was the initial person on the ground, I learned far more about the Chinese culture, people and nuances of doing business in China than I initially appreciated. I expected to impart a great deal of management expertise, which I believe I did; however, in return, I received a much broader and richer base of learning than I ever expected.
What was your biggest surprise?
The largeness of the cities. It could be overwhelming – the sheer numbers of people [23 million in Shanghai per 2010 census], cars, buildings and corresponding size that goes with it all. Experiencing the 2008 Beijing Olympics and the 2010 World Expo in Shanghai was not the China I ever imagined. It became more impactful to me considering what China has accomplished in the last thirty years, especially in the big cities.
China is a communist country. As you lived and worked there, to what extent did you think about the form of the Chinese government?
China is a market capitalist economy that co-exists with communism – you can’t help get the capitalist feeling. The communism/dictatorship doesn’t come through but it doesn’t leave you, either. You don’t think about it but it’s always in the back of your mind, especially when you read the paper. However, as an ex-pat, I just went to work and did my job and adhered to my personal high ethics along with those of my company. But they’re always watching and they’re always aware, even if it’s ostensibly for your safety – e.g., cameras and patrols in the western housing compounds. They have eyes and ears everywhere.
What’s the right mindset to have to be a successful marketer in China?
People are people with similar basic needs and wants the world over. In the Asian culture, no different than other mass markets, assessing these needs and figuring out what makes your products and services relevant is most key. How to engage and effect trial is still the end objective. The mindset of a successful marketer in Shanghai is much the same as in Sydney, or San Francisco.
You’ve worked in the US, England and most recently China. What’s the biggest difference about doing business in China?
China is still a developing country however you have a vast middle class that continues to emerge. The pace of change is much more robust than mature economies. Staying close to these changes and understanding the implications is easier said than done in China.
What do Westerners need to know about marketing and sales in China?
There are many differences among the cities and regions in China. Good market research plays a key role towards understanding differences in consumer behavior, tastes, etc. that are required to develop truly relevant local products.
What was your biggest marketing challenge in China?
Prioritizing limited resources within a huge geography in order to best assess and ultimately capitalize on a broad list of growth options.
What was your experience interacting with Chinese customers?
Very positive. Consistent with the West, they demand high levels of service and partners that focus on innovation. Chinese customers and consumers pay more for quality, however they demand value. They are highly brand conscious and western firms and brands are generally well-regarded. Emphasizing your company and product differentiation versus competition is a must if you expect to penetrate a quality customer base.
What did you learn about building and leading teams comprised of Chinese nationals? What did you learn about hiring in China?
To say hiring is quite challenging would be an understatement. There is often more demand than supply of qualified managers with commercial MNC [multinational corporation] experience. These people tend to job-hop in order to rapidly boost their income as employers are willing to pay a significant premium. Mediocrity can follow as these hires may lack the experience and ability to identify problems, create and implement solutions and ultimately get sustainable results.
With the right hires, building and leading teams can be the most fulfilling aspect of an expat’s role. With well-defined goals, the Chinese nationals are quite hard-working and will rise to any challenge. Like any team anywhere, they require good leadership.
Amy Chua, Yale Law School Professor, author of “Battle Hymn of the Tiger Mother,” and a Chinese mother, created a stir with her recent Op-Ed column about tough and rigorous parenting to raise Chinese children. Based on your experience, what impact does this type of parenting philosophy have on Chinese businessmen and doing business in China?
The Chinese are taught to respect authority – be it parents, grandparents, government, etc. Children are expected to work the many hours required to pursue and attain academic excellence. Falling short is not acceptable. Based on this type of upbringing, you can’t help but see it translated into many aspects of the workplace as well.
What are your top 3 lessons learned from working in China?
1. Relationships are key. Understanding the importance of “guanxi” [pronounced kwanʃi or ɡwanʃ – means connections; relationships; one’s social or business network], and the value of cultivating relationships is an important aspect of life in China.
2. Don’t assume anything. Ask questions and listen intently. There is so much to figure out in a completely different business environment. I learned to be open to leaving my Western lens at the door
3. Interacting with people requires that you value the concept of “face” – being sensitive to and in fact going out of your way to show people individually and in groups an appropriate level of respect. Showing a lack of respect to someone may cause them to “lose face,” which would bring humiliation. The concept of giving and getting “face” is important to having an effective work style in China.
Your company had global headquarters in London with important regional operating units in Illinois and France. What advice do you have for business leaders in remote outposts who need to interact with key corporate colleagues elsewhere in the world?
It’s your job to manage expectations and communicate key points of differences that your far-away colleagues rely on you to know, given the potentially new and in many ways unique environment that your firm is operating in. Brief them regularly and continually progress credible recommendations that show an understanding of the market that will support delivery of the required results. You are autonomous in many ways, however your operations and headquarters are mutually dependent on each other for the support and understanding required to succeed.
What advice do you have for business leaders considering/evaluating an ex-pat assignment in China?
It is an amazing and completely life-changing opportunity both personally and professionally. Translating your company’s competencies and your individual strengths into success within a very different culture offers the ultimate challenge. You’re likely used to hard work and long hours if you’re a business leader. In China, you can expect to work even longer and harder as you establish your business; however with that your successes will be even more fulfilling.
Looking back on your time in China, what, if anything, would you have done differently?
As an ex-pat, you’re not living the real China. I enjoyed learning the language but remained at a basic level. I would have liked to have been more conversant; and probably would have spent more time on the front-end learning and then have more immersion once in China. I tried to do that, but would have liked even more.
Headline For Marketers
Embrace challenge and new opportunities! In our increasingly interconnected and interdependent business world, collaboration and global understanding are more important than ever and critical for success. Greg Morency’s comments about respecting face, leaving his Western lens at the door and guanxi (relationship-building) are definitely relevant, pertinent and applicable to doing business here in the US and across the globe.
Harvey Chimoff is a hands-on marketing leader and business-wide collaborator who builds marketing capabilities in B2B/B2C organizations that drive customer success.