BIZCHINA / Weekly Roundup
'Transplants' a way for China to work with US
By Anita Y.Tang (China Daily)
Updated: 2007-06-15 14:57
If both sides can gain such great benefits, what are we waiting for?
As Minister Bo said in Chicago, the US and China and their two peoples
need to get to know each other in order to strike a long-term strategic
partnership.
His observation reflects Chinese culture, which focuses on prudence,
doing things step by step. It's all about proceeding with caution by
securing a base before taking the next step.
This prudence was displayed in the successful entry into US business by
several Chinese companies over the past decade. In 1994, the Wanxiang
Group initiated Wanxiang America. It grew from selling the group's core
ball bearings to the US market to involvement in the US automotive and
industrial markets
In 1999, the Haier Group created Haier America. It entered the US market
through the niche market of refrigerators and eventually expanded into a
range of products sold by retailers across the United States.
BYD Company set up BYD America in 1999. By 2000 it was Motorola's first
Li-ion battery supplier in China. It used its American foothold for
market expansion.
These Chinese companies successfully entered the US market through a
seeding model. They secured a major customer to form a base there, or
entered the market with a niche, or expanded with growth into other
areas. They took risks while slowly moving into an unfamiliar market.
Chinese enterprises, at least at present, are in a risky position when
dealing with business-savvy economies, particularly in markets outside
their home turf. Nevertheless, this is a step China must take to
successfully go global.
However, with the marketplace rapidly changing, Chinese companies now
need a more time-efficient model than the seeding model. This new
approach could be called the "seedling transplant model".
It would be a lot more appropriate for a Chinese firm to use this
faster-moving model to succeed overseas in the current global economy.
Related readings:
Penalizing China to hurt US
Wuhan Steel: US allegations of dumping unfair
US export controls have small China trade impact
China's growth, stability vital for all nations
The seedling transplant model calls for the transfer of a success-proven
product or service from one geographic location to another, or from one
industry to another. Such a seedling, even a strong seedling, is not yet
a full plant, so should be shielded from predators at the early
transplant stage.
The transplanted product needs to be watered, fertilized, and protected
so that it can take root, spread out, grow and be able to stand alone.
A Chinese seedling company must be protected by an appropriate local
partner in the foreign market - a partner that is able to offer the
Chinese enterprise insight, assistance and support to swiftly align the
Chinese company in the new foreign market.
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