Three Rules for a Successful Market Organization in China

The basis: Recognize specific characteristics of the Chinese market and deal with them specifically

(1) Adjust performance and services to the country's local conditions. Two questions need to be answered prior to any market launch: What does the market demand? How should we adjust services to local conditions? Example: a machine mounted as a superstructure on a truck. The machine from Europe is sturdily built, having a service life of ten years. Yet, the product is not marketable in China. The truck is only designed for a service life of five years. So nobody will need a machine lasting twice as long. It's essential to think like the customer – offer only what really provides benefits in China.

(2) Employees from headquarters are the link between Germany and China. Local executives keep contact on the market. Expatriates will transport quality awareness and basic cultural values. All other functions can be covered by local personnel; the Chinese labor market meanwhile provides qualified people with a globally oriented mindset. Such local personnel should make up the middle management and cultivate customer relationships. That's how you'll gain access to networks of contacts which are vitally important in China.

(3) Adjusted compliance rules should be used in China – otherwise success will fail to materialize. Every company will do well to keep its relationships free from bribery and taking improper advantage. Compliance rules are the right way in this respect. Especially purchasing and procurement need to be protected. Moreover, the country's conditions and circumstances should also be taken into account. China usually has different ways of maintaining relationships than Germany. For example, it's a custom in China to share a meal at a good restaurant. Declining an invitation is considered an insult.

Contact: Gerald Boess, Managing Director International, Kerkhoff Consulting, g.boess@kerkhoff-consulting.com, responsible for the Shanghai branch existing since 2004.