Doing business in China demands a locally relevant strategy, free from head-office prejudices. No cut-and-paste CEOs need apply
When General Electric (GE) was looking for someone to head its China operations, Mark Norbom was an obvious choice. An Asia veteran, Norbom came with over 15 years of experience in markets like Japan, Taiwan, Indonesia, Thailand and Hong Kong. But somewhere deep inside, Norbom knew that compared to China, the rest of Asia was a cakewalk.
A clutch of Indian companies have also made deep inroads into China. NIIT, which entered China 13 years ago, runs 183 co-operative education and training sites across 25 provinces and cities today. During the first three quarters of 2009-2010, China contributed 17 percent of NIIT’s IT training revenues. “When we entered, the country was also looking for [alternative] forms of education. Today, the government is telling us that this is the way to go — you are too slow,” says Prakash Menon, president, NIIT China.
In some cases, the locus of control seems to be shifting to Shanghai and Beijing. Let’s cut back to GM for a bit. As the parent struggled with a bankruptcy and got a government bailout, GM was split into two entities — GM and General Motors International comprising of all operations outside the US.This was done because GM was being bailed out in the US by the taxpayers’ money. General Motors International was headquartered in Shanghai. “That’s a big change. Five years ago, GM looked at China as an emerging market. But very quickly China has become really the most profitable market for GM globally,” says a company watcher. It is happening in other companies too. Today IBM runs all its emerging markets based out of Shanghai — and this includes China, India, Latin America and Africa. Its centre for excellence for global sources is based in China too. “The headquarters need to be willing to empower sufficiently the local operations to tap into the local understanding of the market and the customers, empower enough resources at the local level in order to research and develop the right kind of product, and go to the market with that,” says Tse.
(This story appears in the 30 April, 2010 issue of Forbes India. To visit our Archives, click here.)