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How to achieve success for western companies in China

西方公司如何在中国取得成功 拉雷富逸.jpg

If you listed the factors that can benefit a firm's success in China, being led by a foreigner is certainly not one of them. Yet French born Raphael le Masne de Chermont has managed to beat the odds.



In 2002, he joined glamorous Chinese lifestyle brand Shanghai Tang as executive chairman.



And in just over a decade, he has managed to switch the firm from a single Hong Kong store aimed at Western tourists who wanted a Chinese souvenir during their travels, into a luxury brand attractive to Asian and Chinese shoppers.



This is not easy for him. When he joined the firm, there was no such thing as a high-end Chinese brand. Locals shopping for designer labels would look to overseas names such as Hermes or Burberry.



The secret to Shanghai Tang's successful turnaround was balancing the "knowhow of the West" with the "culture of the East", says Mr le Masne de Chermont.



In practice, this meant pairing up Chinese and Western designers to work together on the firm's products, which range from clothing to home furnishings.



"The Chinese designers bring his culture and his feeling and his sensibility and, the Western designers bring the style, the fabrics, the best practice of international fashion," he says.



Today, the firm continues to run its business in the same way, with half of its designers Chinese and the other half Italian and French.



His simple advice to the Western leaders looking to duplicating Shanghai Tang's success in China is "modesty".



"It's true for every business man going to another culture. You have to understand the new culture and you have to adapt to it."



It's sage advice. China has become a priority for firms seeking growth. As the world's most populous country, its burgeoning middle class offers massive opportunities. But it's easy to underestimate the differences in the knacks of doing business in China and other markets.



Leadership expert Steve Tappin, who works with both Chinese and Western chief executives, says many bosses assume that doing well at home means they will certainly succeed in the East.



Liu Chuanzhi, founder and chairman of Chinese computing giant Lenovo, says that the problem usually stems from a purely theoretical understanding of how businesses operate.



They live in a good residential area with lots of other expats, send their children to international school and have limited interaction with the "real" China, says Joe Baolin Zhou, chief executive of Bond Education Group, the largest private education service company in southern China.



For Western firms to fill in the gaps in their knowledge they need to recruit local business leaders, he says, or Chinese people who have returned from overseas, and put them into senior positions to provide better insight into the Chinese market.



But the biggest lesson is that firms need to be patient.



When China started to encourage development of a market economy, there were no proper systems or written contracts, so doing business with a friend was initially the only way to ensure that they wouldn't be tricked. A personal friendship is still a prerequisite for doing business in China, but it takes time to establish friendship.



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