Soe mjo 6.8
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Transcript of Soe mjo 6.8
The objective of this talk
• Demystifying the dragons of China
• Who are the SOEs
• What are their characteristics
• Why are they good partners
• Drawing the map
• Rules of engagement
• Common mistakes
Who are the SOEs? • The Face of China
• Estimated 35%-45% of the total GDP of $11.4 trillion (2011)
• 64 of them at the fortune 500
What are their characteristics?
• Follow central government policy and plans
• Led by party members aged 50-62
• Promotion is loyalty based
• Seek leading edge technologies
• Large volume projects
• Large budgets for new technologies
• Plan budget
5 Year Plan (FYP 2011-2015)
Focus on Strategic Emerging Industries:
• Clean Energy Technology,
• Next Generation IT
• Biotechnology
• High end equipment manufacturing
• Alternative energy
• New materials
• Clean energy vehicles
• Scientific management NPC members convene in Beijing's Great Hall of the People. (File Photo/Xinhua)
Why State-owned • Repeat business.
• China is about stability.
• Size matters.
• There is a map thus there is a path
• Israelis are an excellent partner
• Israel is not a competitor
• Respect for the Jewish legend
Rules of Engagement
• The name of the game – Respect and cooperation
• Be Patient – 1-2 years to close a contract
• Be Persistence - You cannot be rejected, but postponed
• Repetition – Continue to market.
Rules of Engagement
• The Misconception of Guanxi Put it simply … Connect & Relate
Foreigners are not Chinese
• And will never be
• You must have a Chinese partner
• Trust your Chinese partners to do the business for you.
• Expats based governance approach reflects lack of trust and cooperation.
• SOEs employees Vs. Private sector business people – Different spicy
A toast is more than a hand shake
• Business is personal
• Do not be right… be a partner… understand the local constraints
• If negotiation is tough something is missing
• Don’t be sharp, be polite sharpness will break fast, be smooth and flexible… bamboo
During his visit to China in 1972, President Richard Nixon shares a toast with Chinese Premier Zhou Enlai.
Top Level Management
User
Technical
Top Level Management
Sales & support
R&D
SOE Levels
Solution Provider
Decision Makers
• No One decision maker - Decisions are made in three levels
• Know who are the decision makers in each level. Their personal interest, and organizational interests.
Understanding incentives and interests
• Leaders take pride in driving “home” innovative technologies for a good value
• Strong post sale support and services – SOEs do not like to pay for maintenance… product packaging
• Technology Transfer – Chinese do not seek to steal your technology…
• Buyer / Seller Vs. Partnership and cooperation
Giving Face
A delicate dance: the future premier was given privileged access to the Oval Office Xi Jinping
Market Entry Strategy
• Do the homework – Research as you go, adapt and change based on local needs
• Differentiate with Product Uniqueness. Not Price.
• Embassy work – Use ministers level marketing
• Market education – creating the needs, budget allocations.
Common Mistakes entering China market
• Not fully understanding the forces at play
• Treating SOEs as buyers rather than partners
• No inside information
• No patience, no adaptation
• Short term thinking
• Wrong conclusions