China's Urbanization - 2025

Here's a quick note to all those who are interested in Mckinsey's recent report on China's urbanization by the year 2025. A very interesting read. I will post my thoughts on this later.

Here's the link to Mckinsey.



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Brand Loyalty, China? [Part 1]

Introduction

This topic is of interest to me because, like most of my friends in the industry (we are usually most perplexed, if sales & marketing plans are not going well, and exhilarated when sales & marketing plans go well), I expect brand loyalty to help me sustain and grow my business.

This is a huge topic by itself and you can easily find many articles and discussions on the internet. I don’t intend to write a thesis on it. My writing will primarily reveal some observations I have made regarding the subject, how important it is for me as an entrepreneur and what I can do to achieve it.

Snapshot of Chinese consumers general characteristics

To begin, I have listed some general characteristics I have concluded from past projects and reviewing present literature.

· Diverse market segments across different regions and cities
· Choices are aplenty for Chinese consumers
· Chinese consumers are primarily influenced by media advertising, internet, family and friends
· Brand conscious
· Price-for-value conscious
· Quality and function conscious
· Chinese consumers generally perceive foreign brands to have better quality and status
· Like to associate with products and services that are associated with high or privileged status

#1 First Observation: Check Your Assumptions – the missing equation

I discover that if you peel the onion enough (as a figure of speech), you will discover assumptions and insights on any issue or subject. This is important to me as a business owner because I am daily faced with limited resources and time, and I simply want to make the best use of it. I need insights and clarity to help me achieve economical usage of my resources.

So, what do we understand by brand loyalty? What are our expectations and assumptions?

Brand loyalty is having my customers returning and preferring to purchase my products or services over my competitors. The expectation and assumption is that if I can address the key buying behaviours in my target segment and the 4Ps (place, promotion, price and product), I can usually expect brand loyalty from my customers.

I suggest we check our assumptions because I have observed many successes as there are failures despite companies adequately address key buying behaviours and the 4Ps.

The missing equation, in my observations, is the presence and activities of competitors. The 4Ps and addressing key buying behaviours certainly contribute to the success or failure in my attempt to build brand loyalty. But notice the culprit behind these activities besides me? That’s right, my competitors.

My point is simple; do not assume customers to consistently purchase your products and services even when you have addressed key buying behaviors and the 4Ps, if you have not consider your competition. This is true in China.

Case in point: Cosmetics in China. Chinese women are willing to pay for premium products. However, they are also willing to switch to another premium cosmetic provider if they are giving away generous gifts. Why? Because Chinese women perceived both premium brands to be equally good in addressing their needs since they are in the same category – high-end brands.

Thus, I can be sufficiently and accurately addressing my target segment’s key buying behaviours and the 4Ps but my efforts can be thwarted when one of my competitors pull a stunt like the cosmetic example mentioned.



End of Part 1

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Brand loyalty, China? [Part 2]

#2 Second Observation: Learn from your top competitors – they are probably doing something right

From the many competitors that are competing in the same market space, there are usually a few that manage to achieve brand loyalty. I study them, observe them and try to determine their key success factors in achieving brand loyalty.

From this, I typically uncover certain buying behaviours or demand drivers that I may have overlooked. This discovery helps me in two ways; first, I realize fresh insights into my target segment’s buying behaviours and demand drivers, and second I further determine my value innovation.

Case in point: Using the same cosmetic case we gain two insights namely the importance of product differentiation and Chinese women sensitivity to price (or perceived value). The cosmetic company can then find or create new demand and value that really matter to Chinese women. Professor Chan Kim and Renee Mauborgne of INSEAD explains this very well in the ‘Blue Ocean Strategy’.

By learning from top competitors and acting on the insights gained, you are giving consumers good reasons not to follow your competitor.

#3 Third Observation: The Punch of Promotion & Publicity

The Chinese consumers are swarmed with many choices all vying for their attention. Added to this, the vast majority of Chinese consumers are still not familiar with foreign brands, lifestyles and influences. To make matters more complex, China has diverse consumer market segments. And finally, Chinese consumers rely very much on recommendations made by family and friends, and emotional appeals.

The above phenomenon has three implications:

• Chinese consumers’ decision making can be influenced
• Chinese consumers are being presented incessantly with large amounts of product and service information

Therefore, buying behaviours and demand drivers change over time as current industry players and consumers are constantly interacting and shaping the market landscape.

For an entrepreneur such as me, these implications mean that my brand message has to be consistent and strong working hand in hand with an appropriate promotion plan. The point is to have my brand message lodged deep into my target segment’s minds such that my brand name will outshine my competitors’.

Since I have limited resources, this means maximizing the returns on promotion activities.

#4 Fourth Observation: Consumer demand is changing…..

I don’t have to tell you this as you must already know that China’s consumer demand landscape is changing. The factors that are driving this change are urbanization, increasing affluence, influx of information to consumers and the many alternatives for consumers in the market.

A very important example of this observation is the rapid widening of attention by many organizations on first tier cities to China’s second tier cities. Consumer demand is expected to be huge in China’s second tier cities and already many organizations are vying for market shares.

For a business owner, it is not enough to keep close tabs on his or her market; you have to identify trends and growth opportunities, constantly. I started focusing my attention on China’s first tier cities initially but found many clients have already started to be curious about second and even third tier cities, curious enough to approach my competitors.

Conclusion

Brand loyalty is possible in China but remains elusive for many businesses. There are many key success factors leading to brand loyalty, depending on your industry, and the consumer market landscape is not consistent.

My experiences and observations led me to focus on building a strong and consistent brand, and deliver enough value to my customers giving them enough reasons to prefer my services over my competitors.

This basically means (and I mean it) exceeding clients’ expectations and producing top quality work. I cannot expect 100% brand loyalty because I cannot adequately address all key buying behaviours and the 4Ps; there are simply too many variables.

My strategy has not failed me thus far.



End

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Part 1: Management Skills - lessons learnt from a group of 18 year olds

Introduction

I would like to pen my first blog article on a recent trip to Vietnam (Hanoi) with a group of 18 year olds. This was a voluntary study trip I agreed to lead as the team leader. And the reason why I chose to describe this trip to you is because I have observed (or re-learnt rather) certain lessons on management skills from this lively group that I hope will be useful to you as it is for me by penning it into a blog entry.
I will split this article into 3 Parts:

Part 1

#1 - Management Skill Learnt: Select the Influencer in Your Team to be Your Assistant
#2 - Management Skill Learnt: Earn the Respect of Your Influencer/Assistant and You will Gain Respect from the Team

Part 2

#3 - Management Skill Learnt: Listen to Your Team…..And Set the Stage for the End in Mind
#4 - Management Skill Learnt: Integrity as a Leader - People are Constantly Watching and Evaluating You Especially Your Team

Part 3

#5 - Management Skill Learnt: Leading by Example – Pushing Your Team to Their Potential
#6 - Management Skill Learnt: Be Humble

My first meeting...

Although I had past experiences in leading youth groups, I was a little 'rusty' as I have not been engaging youths for some time. I certainly felt that way in my first meeting with the group.Before every and any meeting, I will ensure that I am prepared.

"My rule of thumb before entering any meeting is this; have the end in mind (many thanks to Stephen R. Covey!)"

The end I have in mind is simple:
(1) I will introduce myself to the group for them to get to know me
(2) I have to get to know the group (at least remember their names)
(3) Details of the trip will be explained
(4) My expectations of the group and the trip (ground rules)

Simple and straightforward right?

When I first saw the group, I was apprehensive and, to be honest, a little fearful that I will have major problems in controlling them. This group was rowdier and appeared more 'rebellious' than the rest of the other teams going elsewhere. One had his hair dyed and styled like a punk rock-star complete with striking purple. A few others were joking and laughing loudly completely oblivious of the ruckus they were causing. And then there were two youths who looked at their rowdier trip-mates with disdain.

There were 15 of them.

"If I can lead and manage a cross-cultural team, I can certainly tame these fellas!", I said to myself.

#1 - Management Skill Learnt: Select the Influencer in Your Team to be Your Assistant

From my past experiences to observing my ex-bosses and handling teams of people from across the globe in consulting projects,

"I have learnt the benefit of delegating control and responsibilities to one of your team members."

I’m quite certain most people know and practice this. The question I am often asked is, “Whom should I select from amongst my team to be my assistant?”.Through experience and learning from others,

"I always make it a point to choose the most influential person in the group I manage to be my assistant."

This practice has helped me tremendously especially if the person you choose to be your assistant has a strong personality and extremely capable or talented. More on this later.

So I size up the group of 15 youths and identified the person I believed to be the influencer in the group to be my assistant. I delegated certain responsibilities to the person and made clear that I needed him to step up to those responsibilities.

Later, I realized that my assistant was not the dominant and real influencer in the group. In fact, there were two others who exerted dominant influence amongst the group. But there is always one who is usually the ‘leader’.

The guy with the rock-star purple hairdo? He is the real influencer.

#2 - Management Skill Learnt: Earn the Respect of Your Influencer/Assistant and You will Gain Respect from the Team

Alright, so I have made a slight mistake and selected someone who is not the real influencer to be my assistant. Regardless, I knew I have t0 start earning respect from the guy with the purple rock-star hairdo.

"Respect from your team is important because with respect comes trust and with trust comes good quality work produced."

If you work with someone whom you give a lot of respect I am certain the quality and the efficiency of your work will be vastly and positively different.

And know this;

"I have learnt from observations and experiencesthat most people want to give you respect and trust. You just have to earn it."

There are many ways to earn the respect of your people. Having more knowledge and experience usually earns you the right to speak and quickly gain the respect from others. I have found 2 qualities that earned me respect from every team I have led. They are integrity and a genuine caring attitude.

I will explain how I put these two qualities into practice on this group of youths.


End of Part 1

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Part 2 - Management Skills: lessons learnt from a group of 18 year olds

Part 2

#3 - Management Skill Learnt: Listen to Your Team…..And Set the Stage for the End in Mind

I listened to the youth group by having each individual share their reasons for participating in the study trip, their objectives and what they hope to achieve. I made sure I remember each of their objectives vividly and made a verbal and public commitment to help them achieve their goals as best as I can. I was sending a message to them;

"I was telling them that I care about them enough to make a commitment to help them achieve their objectives."

Caring is a decision and I made the decision to care about these youths.

"My ex-bosses taught me not to stop at caring and listening to the people you manage and lead. You have to help them understand the end in mind"

what you as a leader want to achieve with the group. Every group wants to know the eventual outcome and the goals they are striving towards. A clear and consistent focal point is, really, half the battle won.

Hence, after listening to each individual I began to explain my objectives and what I want to achieve with and for the group. I explained the end I had in mind.

More importantly, I had set the stage for the end in mind.

#4 - Management Skill Learnt: Integrity as a Leader - People are Constantly Watching and Evaluating You Especially Your Team

"The people you manage and lead are constantly evaluating you and finding reasons to give or withhold their respect and trust."

I knew this fact and I’m sure most of you in managerial positions will agree with me. However, I was reminded again of this point in a most refreshing manner.

Being teenagers, this group of 18 year-olds are constantly observing the way I conduct myself and the degree to which I keep my commitments. In other words, they are evaluating my integrity as a person. In the most refreshing and telling manner, the youths told me one morning that they were disappointed with our local liaison (who is a Singaporean living in Hanoi) who did not seem to keep to his promises and commitments.

They saw how I had kept my integrity and did the things I said I will do, and this built enough trust for the youths to confide in me their views of our local liaison. This episode made me re-discover and re-learn the importance of integrity. Without integrity it is really an uphill task leading your people and doing business with others.

"Keeping to your commitments will help you earn respect and trust from your people."

Remember; people are constantly watching and evaluating you.

End of Part 2

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Part 3 - Management Skills: lesson learnt from a group of 18 year olds

Part 3

#5 - Management Skill Learnt: Leading by Example – Pushing Your Team to Their Potential

To have credible integrity means to lead by example. I demonstrated integrity and thereby earned the youths’ trust through leading by example. If I want them to exhibit the desired behavior, learning attitude and values throughout the study trip the best way is to show them by living out those behaviors, attitude and values.

"When I manage and lead teams of people, I always ensure that I live out the high work standards I would like my people to exhibit. What you are speaks louder than words."

In the context of this study trip, I showed the youths how to ask the right questions during companies’ visit, the value of being punctual, giving help to others before they request it, the importance of being curious and being humble.

I did not tell them I was teaching them these values and habits. I showed it to them consistently everyday in the most practical ways. For the rest of the trip, every single individual started to exhibit some, if not all, of these values and habits.

"What you are speaks louder than words. What you are sets the potential of your team."

#6 - Management Skill Learnt: Be Humble

I was fortunate to have mentors who taught me the importance of being humble.

"To be humble means to remain teachable for the simple reason of continuous learning and development."

It was natural as a team leader to think and feel that I knew it all and I was able to handle every circumstance.

"This attitude is the very opposite of teachability and the opportunity cost to it is that I will miss out lessons that will help me grow as a person and consultant."

We were doing our shopping at Hanoi’s most famous and busiest street market. I negotiated and agreed with the owner on the price of a packet of sugar-cane drink. However, the spouse of the owner disagreed with the amount when I returned later to pay for and pick up my sugar-cane drink. We haggled for a while and just as I was about to give in to the owners’ higher-than-agreed amount for the packet of sugar-cane, the youths appeared and asked if I needed help. They were by then quite an expert in price negotiation and very street smart.

I didn’t reply because my natural instinct as a team leader prompted me not to ask help from my team members.

The youths eventually helped me and pulled me out of that embarrassing situation. It was a small incident but I was reminded on the lesson of being teachable.

"There are times as a leader when I do not have answers to certain situations."

This is when the strength and unity of the team comes into play; we overcome difficulties together as a team.

"I have learnt from past experiences that it is not unbecoming of a leader to admit that he or she needs help from the team."

I usually find the responses from the people I lead very encouraging; they are always ready to offer their help and it builds rapport.

For me as a leader, such times are golden opportunities for me to learn from my team members and thereby further develop my skills and knowledge. For the team, it brings them closer to their leader because they find the opportunity to contribute and overcome their leader’s predicament.

Can you imagine the opportunity cost for not being humble?

Management Skill Learnt: Conclusion

Towards the end of the study trip, the youths invited me into their party room and told me what they thought of me initially. In a nutshell, they accepted me into their ranks. This was evident in their willingness to exhibit the values I have showed them and through the questions they raised during companies’ visits.

I have achieved the end I had in mind and it really made it worthwhile to spend 2 weeks in Hanoi with this group of youths.

The management skills I had re-learnt certainly enriched my own management experiences. After the trip, I was even more convinced that I must continue to exhibit the best credible integrity I could and genuine care for my team.

"I have observed and learned that these six management skills are applicable universally. "

They worked for me and I hope they will work for you too.


End

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Doing Business in China: Lessons learnt from a story

A Tale of Two Monks

There was once a wise old monk who had a young apprentice. The old monk put all his heart and strength teaching and passing on to his young apprentice the knowledge and wisdom he had learnt over many years. The young apprentice did not disappoint for he proved to be intelligent and kind. He took great care of his master and the old monk was happy.

Once a week, the old monk and his apprentice would make a short journey to nearby villages to see patients and to ask for alms. The old monk was accomplished in medicine.

The old monk and his apprentice had to cross a river before they could reach the villages. Like any young man, the apprentice looked forward to each journey with eager anticipation as this provided his only chance to step out of the monastery and interact with the world.

On this day, the apprentice made the usual preparations and informed his master they are ready for the visit to the villages. Both master and student left the monastery and headed towards the river.

From afar, the student saw that something was wrong with the bridge. Walking ahead of his aged master, he jogged a little to see clearly what had happened to the bridge. To his dismal, the bridge had collapsed.

Not only had the bridge collapsed, there was a young woman standing by the entry of the collapsed bridge, crying.

The old monk realized what happened and informed his apprentice that they had to trek down river to make a crossing. They had to wade through the river. The old monk turned to the young woman and gently asked her if she needed help. The distraught young woman replied she was upset because she couldn’t bring medicine she had received from the monastery back to her ailing mother now that the bridge has collapsed.

The old monk smiled and assured her that her return to her ailing mother would not be delayed; they could wade across the river but they have to travel a little downstream. Hearing this, the young woman brightened and was grateful to the old monk and his young apprentice.

The old monk, his student and the young woman made their way downstream and found a crossing site where they could safely wade through the river. The young woman was apprehensive and fearful of the crossing; she could not swim and was afraid she will be swept by the current.

The old monk turned to his student, told him to hand over their traveling bags, carry the young woman on his back and cross the river. The young apprentice believed that male monks should never be that close physically to a woman and with his staunch belief respectfully refused his master’s request.

The old monk had no other choice but to carry the young woman on his back.

When they had crossed over to the other side, the young woman was full of gratitude and offered the old monk and his student some money. The young woman invited them to her house and hurriedly left for her village to attend to her ailing mother.

The old monk and his apprentice slowly made their way to the village. After some distance, the young apprentice could not help but remarked to his master that he was appalled by his master’s physical closeness with the young woman. The young apprentice did not think it was right for a male monk to be so physically close to a woman.

The old monk smiled, turned to his young apprentice and asked if he was very disturbed by the old monk’s actions. The young apprentice replied yes. The old monk then asked if the young apprentice had been thinking about this matter since the crossing. The young apprentice replied yes.

Putting his hand on his young apprentice’s shoulder, he said: “My young apprentice, you are very upset with my action and have been thinking about it since we left the river. I stopped carrying the young woman after we have crossed the river. But you my young apprentice, you have not stopped carrying her in your mind since that time. It is time now to let her go lest you’d be thinking of her tonight.”




This story was told to me by a Chinese business friend of mine some time ago. My friend is rather philosophical and enjoys talking to people about politics, life and business. He asked me if I wanted his advice on doing business in China since he has discussed this subject with many young entreneurs (foreign and local Chinese) like me. I said yes of course!

After narrating the story, I pressed him for the advice he promised. He said to me that the answer to that will have to come from me. Duh?!

He knew I was flustered but assured me that the story certainly has a moral and advice behind it. He told me he did this many times with many different persons. And every single one of them after some time told him the moral and advice from the story, from their perspectives.

This, to my friend, made more sense and it is more valuable advice.

I have learnt many lessons on doing business (in China) from this story, from my perspective of course.

Now, I'd like to hear yours.

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