An old Chinese wisdom says 不入虎穴，焉得虎子 – One may only catch the tiger cub by entering the tiger’s den. The wisdom behind the saying is that if you want to gain something precious and valuable you need to take risks and sometimes even make sacrifices. This saying is indeed topical, not only because the Chinese just started the year of the tiger, but also because numerous companies are considering of entering the Chinese market – tiger’s den.
I use this wisdom often when I talk with my clients, colleagues and friends about the possibilities and risks when establishing operations in China. China has been seen traditionally as a country of low-cost manufacturing and poor quality. And surviving with the business culture is like wading through a jungle. Well, partly this is all still true. Manufacturing is definitely cheaper in China than it is in any of the Western countries. The business culture is strongly influenced by China’s long and rich history, traditions and beliefs. However, the quality of products and processes has improved tremendously. The business life in China has adapted some Western ways of dealing with things. The emphasis nevertheless is on the word “some”.
Chinese manufacturers have realized that poor quality dispels the customers. Though the country and population are huge and opportunities for success are numerous; one must remember that the competition is severe. It is not only the Chinese companies battling on the field but also the foreign companies hoping to catch the tiger cub. This battle forces to cut production costs but meanwhile improve the quality, provide unique features and offer better services.
As the standard of living grows, customers become more sophisticated and they are not willing to spend their money on crap. This is the case in today’s China as well. When I visited clothing factories in South China end of last year I was told that the factories can not afford to manufacture “cha bu duo” (engl. not lacking a lot, close enough) quality. If they want to build sustainable business they are required to meet the customers’ requirements. And it is not only the textile manufacturers that face this challenge; it’s the manufacturers of consumer goods, machinery, electronics and others as well.
The point of this writing is that one should not be afraid of China. It should be seen as a potential destination for operations in order to cut down costs, still produce products of high quality, and maybe even gain a nice share of Chinese market. The precious tiger cub.
That’s so true! This can be compared to the way people in Finland are talking about Russian markets. There is so many opportunities – how the use them?
I wish more courage to Finnish companies when dealing with these things.
Salla, we should definately find the courage to catch the hidden opportunities. Otherwise we will be blocked out from the global development.
Me: These products look good!
Chinese salesman: No, you don’t want them, they are for domestic markets. International quality is over there.
And for extra price…