Thursday, May 24, 2007

China strategy in Six Steps: Part 2 of 2

This is second of two parts of my presentation from a recent event hosted by the Minnesota Trade Office. The first part, which you can find here, covers an introduction to China strategy and a discussion of the first step –- analyzing your "China readiness."

As we continue today with "The Six Steps to Building a China Strategy," we start with Step 2: finding your addressable market. In China, as with any other market, focus is a key to success. Step 3 involves doing competitive intelligence, identifying your competition. Always keep in mind that your markets and competitors at home are not the same markets competitors you'll find in China.

Step 4 is to identify where you will fit in the value chain. Your China strategy will be determined by where in the value chain you will play. In Step 5 we look at which assets to localize. There are a broad range of options for how deeply a company can participate in China. The key lesson is, don't do more than you have to! A company's participation mode is determined by best "match" of external requirements, internal resources and a risk profile. How "local" do you need to be? Identify the key assets you will need on the ground in China.

Step 6 covers entry structure: Build it or buy it? Based on what assets you will need to localize, you can begin thinking about how to localize them, either by building them yourself or "buy" them by partnering. These decisions determine your "build it" strategy or form the selection criteria to find appropriate China partners.

In China, understanding and managing relationships is fundamental to supporting a successful business. Everything flows from an opportunity within a relationship.

More on these topics at Also, be sure to enter the drawing for an iPod nano by filling out our survey.

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