China shoppers

While many MNCs selling B2B came to China following global clients, today the opportunity is to tap the potential of China’s sophisticated domestic firms and customers.

The playbook for going local includes revamping go-to-market strategy, investing in R&D for China-specific products, and enhancing local decision-making.

Companies are taking control of distribution in order to drive volume, deepen customer allegiance, and align with their premium-product positioning.  For products and technologies where IP is less sensitive (or that face regulations that favour local players), MNCs are striking licensing deals with Chinese firms.  By working with local companies as opposed to fighting them, these firms often enjoy high growth.

In response to the rise of online sales in China, MNCs are setting up China-only B2B e-commerce platforms – separate from their existing ones in North America.  Such platforms can be quickly ramped up and can tap into entirely new sources of revenue.

Another plank of a go-local strategy is to invest in China R&D centres.  The centres hedge their bets with a pipeline of possible winners, but only select a few to bring to market.  In one successful case, the team developed technology to digitise images.  These images enable remote diagnosis alleviating a shortage of doctors in a particular speciality.  This solution, developed for China, is being adopted in other countries.

The backbone of a strong ‘go local’ strategy is a China team empowered to make independent decisions swiftly.  Many MNCs have a hard time being China-centric when a disconnect exists between managers on the ground and HQ.  Too often, local leaders know what needs to be done, and the global CEO also may understand the China challenge, but corporate staff with rigid standard operating procedures hold things back, wasting time that MNCs can ill afford.

For China leadership teams to succeed, they need HQ support.  To address this challenge, the firm of one China CEO Forum member established a ‘China Immersion Program’ designed to entice executives from HQ to spend time in China for six months.  By using the China budget to cover relocation costs, global executives are encouraged to do their jobs in the Shanghai office.  When they return to HQ, they bring with them deeper ties to the local team and a nuanced understanding of the market challenges in China.

CEO Forum members can read more case examples and highlights from the discussion via login.

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