The Future Competition

In two recently published articles, Blue Canyon CEO George F. Brown, Jr. and China Practice Director David G. Hartman argue that the ranks of top global competitors will soon include Chinese companies. Among the reasons for this are the growth of the Chinese economy itself, the country’s huge investment in science and engineering, government industrial policy and funding, the country’s strong fast-follower competencies, and the forces of globalization.

To face the challenge of emerging Chinese competition, it is crucial to understand the following concepts.

• Beyond Price—Don’t Assume the Chinese will only target price buyers. The ability of Chinese firms to reach the markets at the Better-Best end of the product spectrum will increase continually, reflecting their improving position in terms of engineering and design. In some industries, this reality will create a double-edged sword as new competitors bring innovation and attractive pricing to the market.
• China Speed— Chinese firms can move at a pace unequalled in western markets. Unless your firm is able to change, speed will be one of the major sources of competitive disadvantage that you will face vis-à-vis your new Chinese competitors. Whether it is product development, or decision making on an acquisition, or some other business activity, anticipate that Chinese companies can move at a pace that will make your own processes seem to chug along as slowly as the coal trains of the early 1800s.
• Fast Learners—The rapid success of Chinese firms requires a reexamination of many long held western business concepts and strategies. Chinese companies have seen success in industries in which their firms and products were basic (at best) only a few years ago. Western firms that aspire to sustained global leadership must:
  1) Bring global competencies associated with successful “fast learner” countries into their firm’s portfolio.
  2) Embrace the emerging markets of the future and develop products that enable full participation in them.
  3) Redirect spending on research and product development towards projects that enable your firm to reach these broader markets.

For a more detailed exploration of this topic, the two articles cited in this email newsletter are available from Blue Canyon Partners or online. They Aren’t Who We Thought They Were was published in Industry Week.  Contact us for a copy of The Second Mouse Gets the Cheese.