Poor market assumptions, changing government policies and an oftentimes un- level playing field no doubt have contributed to many failed China initiatives. However, equally damaging has been the absence of a clear foreknowledge of the cost, stress and risk to a company’s organization that can occur when doing business in China. Inadequate attention in this area continues to result in companies being ill-prepared to venture into China, irrespective of external dynamics.
What have we learned from these past 25 years of doing business in China? How can we apply these lessons to companies expanding into China today? Can we distill from these lessons the core characteristics and competencies that a company needs to be successful in China? If so, is there a way to identify and nurture these success factors in a company before it goes to China, providing a solid foundation for what is still a comparatively risky venture?
The China Readiness Assessment from Technomic Asia was designed to address these questions, helping company executives and stakeholders take an introspective look at their organization with the aim of identifying core assets and requirements to support a China initiative. The China Readiness Assessment provides a constructive learning environment wherein executives can more effectively think and plan for China.
The China Readiness Assessment relies on an historical model of successful China investment and places a company along two key dimensions.
- Motivation: the dominant motivator(s) to invest in China and the level of urgency of these motivations to pursue a China initiative which will directly affect the amount of risk which can be reasonably taken.
- Organization: A company’s resources and competencies in three functional areas that indicate how prepared a company is to explore and then execute a China growth initiative. Any gaps in resources and competencies need to be evaluated by management to determine their level of importance and their potential risk to any China expansion effort.
Our research and experience find that companies fall into one of four quadrants in terms of their state of readiness for China.
The end result of the China Readiness Assessment creates a solid foundation to any business expansion strategy developed for China, characterizing…
- Identification of—and agreement on—key drivers of a China expansion
- Potential organizational gaps
- Level of relationship management experience
- Exposure based on client’s tolerance for risk
- Implications on form of China entry or expansion
- Identification of broad market context under which client will
operate in China
- Action plan to prepare for a China investment initiative, as appropriate￼
For companies that are interested in China, but have not yet established specific initiatives for entry or are in the early stages of exploring investment, the China Readiness Assessment provides:
- A methodology to help senior management understand their unique corporate culture, asset profile and motivation in order to better prepare them to enter or expand into China
- A view of the company benchmarked against many others who have expanded into China, using the learning of these firms to highlight critical entry/expansion issues or vulnerabilities.
- A forum for effective dialogue among senior management with the aim of developing a more effective action plan to investigate and pursue a China expansion