By: Paul Hesselschwerdt
None of us need to be reminded of the pace of growth in China, actually China and greater Taiwan as it is sometimes called, particularly in technology segments. For example, production of semiconductors has shifted so significantly to Asia, particularly China and Taiwan, that these two counties now account for nearly half of all world-wide production.
In discussions with sales and marketing people working for one of the top 5 semiconductor companies, it is interesting to note the differences in how they think about meeting their customer needs vs. how their counterparts in the US and Europe do.
In western countries, for example account managers often focus on creating value for their customers by helping to impact the top line of their customers through products that enhance the performance of the end customer product. Using technology to improve the performance of the latest iPhone or LED television ultimately creates innovations which drive higher prices and margins for manufacturers.
In discussions with account managers in China and Taiwan we hear a different story. There, customer value creation focuses significantly on the manufacturing process. This is not surprising, given that many new product designs are done in the west, where customers are looking for innovative designs; whereas the manufacture of those innovative designs is often done in China, Taiwan, Korea or Singapore.
Here are 4 areas where western countries need to adapt their selling and marketing approaches in order to succeed in China and Taiwan:
1. PRODUCT POSITIONING: Sales and marketing people and their managers working in China and Taiwan need to remember that creating value for customers there means focusing more on reducing manufacturing costs and improving overall supply chain costs and efficiencies. This has implications for product positioning, value selling and competitive positioning, all of which should be adapted for the local markets;
2. COMPETITIVE DIFFERENTIATION: Pressure on supplier’s prices, which is a challenge in most markets, is especially difficult in China and Taiwan. Nevertheless, suppliers can create competitive differentiation in areas that enable them to compete on factors other than price. These include positioning total supply chain costs (vs. simply part price), providing local support in engineering, design and supply chain and promoting their company’s global capabilities;
3. SALES GOALS AND STRATEGIES: Most importantly, western managers need to accept the significant differences of doing business in China and adapt accordingly. This will have implications for managing distribution channels, establishing sales goals and strategies, pricing and even sales compensation plans.
4. NO LONGER JUST EXPORT ECONOMIES: Western companies need to recognize that China and Taiwan are no longer simply manufacture for export economies. A recent report in the Harvard Business Review pointed out that “the combined flow of shipping containers between Asia and North America and Asia and Europe is already less than the flow among Asian countries, with much of the latter consisting of goods imported to China.” In other words, the Asian economies, led by China have established their own regional trading bloc.
The good news is that profitable growth is available for companies that recognize the new opportunities in China and Taiwan and adapt their sales and marketing strategies to reflect the unique elements of doing business there.
How are you planning to capture it?
image credit: gp314
By: Jay Gronlund, Global Partners Principal
Recognizing the daunting challenges for sustaining profitable growth in the future, many companies are increasingly focusing on emerging countries, which represent a high potential opportunity to increase revenues from existing brands. As an example of seeking a fresh perspective for this opportunity, a leading pharmaceutical company recently invited me to conduct a workshop on how to revitalize their core business in developing countries - e.g. in Latin America, Middle East, Central/Eastern Europe and Southeast Asia. Although each country is different in many ways, culturally, economically, politically and regulatory, all participants nevertheless shared the same central challenge: how to improve their product/brand value in view of an entirely different world ahead, especially with the growth of lower price generics and fewer resources available to them.
This situation is common to so many companies today that seek a new paradigm for growth. The current recession has forced managers to become more efficient, or to "do more with less". The old model for building a business primarily through blockbuster product innovations will not be enough in the future. Whether it is a healthcare item, an electronics product, or a B2B service, the challenge of building extraordinary value for products and businesses will be more complex and demanding. This task will require a complete re-assessment of the market and how to position an organization's strengths - in particular, a re-orientation from functional to emotional benefits (e.g. trust and comfort), from product to customer focus, and from established to emerging markets.
Jay Gronlund is a Principal at Global Partners who focuses in the areas of brand development, new product launch and marketing in emerging economies, Jay has been an Adjunct Professor at NYU since 1999, teaching a course on "Positioning and Brand Development". He has also written many articles on different international themes, as well as a book on Branding in the Over-the-Counter pharmaceutical industry. For more information, interested readers can contact Jay at firstname.lastname@example.org