Success in China is All About Attitude

4/26/2010 - What comes to mind when you think about market entry in China? Excitement for the future? Trepidation about the physical and cultural gaps? Francesco Duina at the JLJ Group US office in Boston has just issued a white paper about how an individual’s or a company’s attitude can affect the outcome of their success in China. The research found that an attitude was one of four basic categories: committed, pragmatic, sideliners, and afraid. Which describes your attitude?




JANET CARMOSKY: So I’m Janet Carmosky from The China Business Network. I’m talking with Francesco Duina from the JLJ Group – solutions for China entry and growth. They’re in Shanghai, Beijing, and Boston. You can check them out at JLJGroup.com.

Thanks for being with us today Francesco.

FRANCESCO DUINA: Thank you.

CARMOSKY: I read your paper called “Poisoned Chalice or Great Opportunity,” which looks at Boston’s tech firms and their attitude to China. And you do something which I find really interesting – you end up categorizing these Boston tech firms into four great boxes: Committed, Pragmatic, Sideliners, or Afraid. And anyone who’s listening, you can find this paper at jljgroup.com, you can find it in the RESOURCES section of The China Business Network, or on Francesco’s profile. So I would encourage you all to look at it because I found it very interesting. I’m going to as you a kind of out-of-the-box question about this piece of research you did. It is: how much of the determinant of success is attitude? The attitude of being committed versus being the total opposite, which is afraid? And that attitude as opposed to commercial risk? A lot of people wonder “should I be in China?” They tend to evaluate based on their category, the level of development of their industry, but how important is attitude alone: Committed, Pragmatic, Sideliners, or Afraid? Can you give us a read on that?

DUINA: That’s a good question. Well, our discovery in a way was of course attitude is very important, there’s no question about that. One of our primary findings from doing the survey was precisely that many companies who probably should be in China, either for sourcing or export as an export destination are not, and are quite afraid of it. It’s absolutely important, and you will see some variation in terms of attitude even within one product line of service category, as you mentioned. Even if you hold the level of risk steady, or to control it, you will still see significant variation in attitude, so attitude has a lot of impact for companies.

Attitude makes a big difference. The real question for us as we discovered more and more, and gathered facts was: why are there such differences is attitudes? And how can those attitudes be altered or changed if it’s advisable to do so? In other words, given a certain level of risk or special considerations, why are there such differences in attitudes?

The next level, if you will, is to think about why are these differences there? In the Afraid camp, in our survey, for example, we saw the lack of knowledge about China, as well as an almost - I would say emotional pride in being a US company. This is especially so for sourcing questions, the companies that should perhaps be thinking about sourcing. We found that those two things made a huge difference: in a way, lack of clarity coupled with defensiveness.

CARMOSKY: Is it possible that there are just some sectors that even if you have an open mind and a great mindset, and even if you’ve got a solid map of the commercial landscape, and even if you have a great resource team, you’re just not going to get anywhere? If you’ve got IP protection issues or RMB valuation issues, are you just not going to be able to win? Or do you think more of the case is that there are companies who could be winning if they just got the right perspective and the right resources? And I’m being unfair because this is thirty years of my life and I’m asking you to answer the question I always ask myself. But you’ve got quite a lot of experience, where are you? if you got the right mindset and the right map, if you had the right mindset you would not know that the sector that you’re looking at is already crowded and mature. Yes.

DUINA: Correct. The sure thing as well is a question of - it’s almost the reverse. In the case of high tech companies from Boston, Route 128 companies, basically they are a little bit of too far advanced in what they sell or what they make in terms of very sophisticated laser technologies or biotechnologies or biometric products. And the Chinese market simply isn’t there. The market might be there maybe foreign corporations in China might be interested in their product, but not the actual domestic Chinese market. In ten years from now, that might be the case, but now it isn’t. There too we might say to them, yes, there might be a market, but wait five years before actually considering entering. So to answer your question, no, we actually think companies ought to be very careful and not take it for granted. There’s a lot of upsides and a lot of potential downsides in China.

And the last thing I should mention is the IP infringements. For high tech companies, depending on the sector they’re in and the product line they’re in, IP is a very sensitive thing. Some things can be reverse engineered quite fast. Some companies are truly afraid of that. Others are not, for a number of reasons, in part because they can protect it any way, because what’s infringeable isn’t the core technology, it’s just part of it. But if it is the core technology, then they’re going to be scared of it. We understand that, we don’t necessarily push them in that direction.

CARMOSKY: “The Poisoned Chalice or Great Opportunity” piece was looking at Boston’s tech firms. And your US office is in Boston. Tell me, if you can, how a company based in the US in general, or Boston in particular, could contact you or could read this report and come to sort of understanding about the opportunities in China are.

DUINA: What our hope would be is by reading it they would be able to identify themselves as one of the four types of companies that we found along Route 128. And also read the end of the report where we said for some of these boxes, the Hesitant behavior is justifiable, but often it’s based on lack of precise information. That’s definitely worth the time to get the right information to determine whether they should in fact basically not worry about China or they’re missing a great opportunity. Our sense is that for majority of companies that are hesitant, they shouldn’t be. They should invest a little bit of time and resources to figure out really what the opportunity is and make decision. When that happens, based on our experience and based on what we learned from Route 128, for a lot of the companies that were on fence, we believe that we changed their minds. Having said that, we can, yes, with proper knowledge and information.

CARMOSKY: So, keep and open mind and don’t be afraid to take a second look.

DUINA: Absolutely, and the upfront investment in terms of gathering the information so that you are properly aware of the ups and downs – the upsides and downsides – is inexpensive, so the upfront cost is a small investment. And it can be worth millions of dollars, right? So we think, obviously, that for many companies that are hesitant, they should do it.

CARMOSKY: Thank you very much Francesco. Where can people contact you if they’re interested in learning more about your report or about what JLJ Group does?

DUINA: Certainly you can go to our website www.jljgroup.com/us for the US audience, if they’re interested, or email me at Francesco.Duina@jljgroup.com or call me at 857-636-2596.

CARMOSKY: Or one more way – go to theChinabusinessnetwork.com Directory and click on your profile and hit contact me – it all works.

Thanks Francesco.

DUINA: Thank you.


Francesco Duina is the North America Director at The JLJ Group. He helps American companies enter and grow in the China market, with services ranging from basic market research all the way to corporate formation, distribution set up, factory identification, due diligence, and executive and mid-level management searches. Read more