Intercedent Insight: January 2011

Intercedent Insight: China-Conservative Nimbleness 2011

In its Year in Review, The Economist coined the term “multinationimbles” or “multinational and nimble”.  A nimble multinational prospers from a combination of the advantages of scale and having the agility to respond. 

 

What attributes will a foreign multinational company need to demonstrate to be China nimble in 2011? 

 

Taking steps to secure future income from new business initiatives will need to be balanced against strengthening management oversight and corporate governance to protect historical revenues in the quest to stay ahead of the curve as China’s economy continues to evolve. 

 

A proactive and dedicated management team in place to think about tomorrow’s market and formulate budgets to secure it is the nimble part.

 

Have you conducted an internal or external SWOT analysis of your China operation? This must be based on a detailed current market analysis with a focus on the impact of new competitors and what really drives your customer’s decisions? 

 

The need to review the multimedia and internet aspects of marketing may be symbolized by the question: Do we need to develop a Chinese language IPAD App to explain our products? 

  

Is there a constructive way to work with a Chinese industry counterpart to strengthen your company’s international business operations and improve your company’s global profitability or capital strength? 

 

A capital investment plan might be considered for a merger or venture capital project to acquire new technology or service within or outside China or abroad which is complementary to the existing China revenue model. 

 

To better govern the existing China operation in order to protect the current revenue base is the conservative defensive element of multinationimbles. 

 

Does a multinational have a China advisory committee or a regional or headquartered-based Board that can provide strategic oversight, improve governance and avoid or manage a crisis arising from your China business? 

 

Are there appropriate legal and financial processes in place to cope with an increasingly sophisticated Chinese regulatory and tax environment? 

 

The macro environment will be a minefield as economic growth slows and shifts in focus. The strategic framework of the new Five Year Plan and it impact on your business should be studied. 

 

Chinese Netizens, the Wumaodang and hackers will mean new public relations and information security challenges.

 

The growth of local civil society and nationalism mean that companies may need to improve community engagement in and around the factories where products are manufactured or sourced.

  

Being nimble but conservative will be the key attribute for foreign companies in China in 2011.  If corporate management puts outstanding efforts into getting the China business plan right and in synch with the policy directions contained in the new Five Year Plan then such efforts will likely bear fruit.

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