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7/31/2019 Universal Consensus - China - What Really Matters
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Business in China What will really matter
Andreas Fried & Aditya Chinnareddy
+1 760.696.0151
7/31/2019 Universal Consensus - China - What Really Matters
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Agenda
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Who We Are
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Who We AreMulticultural professionals optimizing cross-border business
Covering4.3 billion People
$56.8 trillion GDP
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Who We Do It ForBMIA Application:
Be the Worlds local business in yourindustry
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Overview of China
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1,4 billion people (U.S. 313 mn.) GDP $11.3 tn. (U.S. $15 tn.)
GDP/capita $8,300 (U.S. $48,000)
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The Opportunity
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Growth Has Been Staggeringly Fast
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Chinas Five Year Plan: 2011-2015
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POSTI
TIVE
OPENNESS OF MARKET
Environm.
protectionHigh-end
equip.
manufact.
Biotech
IT-
hardware
Renewable
energy
Consumer
electronics
Medical
devices
Tourism
Insurance
Logistics
IT-
software &
services
Pharma
Culture &
entertain
mentFood &
GroceriesRetail
N
EGATIVE
Real-estate
Coal &
steel
Chemicals
Low-end
equipmentBanking
Telecom
Railways
Red marked included in current 5-year plan
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Overview What are thecritical trends
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Aging Population
Workforce peak in next 10 years Labor replacement problem
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Filial Piety
The 1+6 rule: One child policy worker willhave to support 6 (2 parents and 4grandparents)
Extreme pressure on one-child tosucceed to support family
Highly competitive society
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Savings
China net foreign assets of $2 trillion; U.S. has net
debts of $2.5 trillion
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Disposable income
12.3% annual increase in disposable income Average spending up 75%
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Consumer spending
Shift from export to domestic consumption Stronger currency makes imported goods
affordable
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Increasing Costs
10% increase in yearly wages Will reach U.S. cost level in 2015
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Increasing Costs
Highest labor cost in emerging Asia
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U.S. vs. China
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Barriers
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UnderstandingConsumer Behavior
Little Emperors
Face Consumption
Peer Pressure:
78 % decide in store what to buy. 37 % is easily susceptible to promotions,
22 % sticks to original idea
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The Intermediary
Importance of the intermediary (Zhong Jian Ren)
Wariness of Foreigners
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Chinese Communist Party(CCP)
CCP deeply involved in government and largeenterprises
Loyalty & Status
Information Decision-maker
Power is centralized at national level butdecentralized at local level
State only owns large companies
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Hierarchy
Cardinal Relationships Ruler and Ruled
Husband and Wife
Parents and Children Older and Younger Brothers
Modern day sixth: Employer and Employee
Importance of Guan Xi
Give as much as you take
Hierarchy & CardinalRelationships
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Endurance &Holistic Thinking
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Crucial Success Factors
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Ethno-Centric vs. Objective-Centric
Ethno-Centric
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No Knowledge
Were Better
Customs &
Protocol
Recognition
of Impact
Objective-
Centric
Leveraging
Knowledge
What are the Stages ofDeveloping Global Mindset
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Four Areas of Impact
China in
GlobalStrategy
Production
Innovation
Emerging
Competition
Mega-
market
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Case Studies
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I have never worked in such a price-sensitive market.- Best Buy China President David Sisson
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China is not DIY but DIFM (Do It For Me):
Homeowners hire designers for all their homeimprovementeven where to put a vase
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U i l C F t Cli t
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Universal Consensus Fortune 100 Client
Establish
Rapport
CHINESE
Zhong Jian Ren (The Intermediary)Shehui Dengji (Social Status)Zhengti Guannian (Holistic Thinking)
Jiejian (Thrift)Mian Zi (Face or Social Capital)Chiku Nailao (Endurance)Guan Xi (Relationship is paramount)
WESTERN
Networking Meetings & E-blastsThe younger, the betterLinear thinking
Quality winsConfrontation when necessaryMinor deviations for negotiating roomTime is of the essence
Maximize
LeadGeneration
Maintain
The Client
32% Increased
Sales
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Conclusions
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Just Remember: Open Minds Open Doors
What Could Have Happened
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Global vision stems from HQ withoutregard to regional role-out
Global policies exist, but local marketsare not consulted and often go rogue
Systems, processes and roles notintegrated; limited understanding ofthem across cultures
Global reporting structure isinconsistent or underdeveloped
Global communication protocol may
not exist
Need forchange oroptimizationis recognizedand sought
Changemanagementassistance isobtained
Evaluationmade
Glocalizationvision isestablished
Action Planis set in
motion
Global Vision & Valuestake into considerationcultural fluency
Global Policies; LocalAdaptation
Global Integrated Systemsor Education/Exposure
Global reporting structureby function
Global Communication
Protocol
What Could Have Happened Glocalization Lens
W H H l
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Core Competence,
Increased Agility &Reduced Costs and
Risk
Were Here to Help The World Might be Separated by International Borders,
but your Business Doesnt Have to Be
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Strategic Alliance PartnersPreeminent firms supporting international business
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linkedin.com/in/andreasfriedlinkedin.com/in/adityareddyc
Thank You!