I open Grain-of-Salt (GoR) with a post from the far East as I am currently spending time for business and leisure in China. It only seems relevent to comment on my current location and what is the "hottest spot" in the world right now by measure of cultural and economic happenings.
Zhonghua, Middle Kingdom, or the People's Republic of China has been awake from its cultural slumber for close to 40 years now, but it is now abundantly clear the 1.39 Billion people residing within are ready to consume as the West has for so long. The austerity of the past has given way to endless concrete jungles and legions of roving laborers all making up a new country that is in no way your grandfather's China. As it is now 2011 (the year of the Rabbit), development in China has been in high-gear since Mao's death in 1976. U.S. firms have been here for some time exploring the nuances of the country, which there are many, but it is only in the past 10 years that the Chinese have slowly begun to embrace their purchasing power. This is most notable from the countless white papers, government reports, and corporate fortune-tellings prepared by monitoring bodies and MNCs as they all predict that China will be the biggest luxury goods market be decade's end or earlier.
A notoriously high savings rate and a cultural inhibition towards displaying wealth has been righted and begun to align with the glamourous, brand-loving lifestyles of many Western consumers. "Showing-off" is now the norm in anyway possible and foreign brands of all types are continuing to Joint-Venture their way in-country in order to satisfy the trend. Walking around my current place of residence (ChongQing), my personal fashion and demeanour are quickly outdone by the Emergenildo Zegna, Chloe, Burberry, etc. wearing fashionistas around me. These shopping habits are extended into every range of durable product, thus cars, art, property, and sport industries are also soaring. Amongst the scurry to show-off are the impecable black and grey markets across the country, which with NASA-esque precision, are producing some of the best copy-cat products and services I've ever seen. I believe the "iPad 2" is already floating around in some markets here (and Steve Jobs knows it) and it works! French luxury goods powerhouse Louis Vuitton's past CEO was famously cavaleir about these happenings amongst his own products saying; "Copying is the most sincere form of flattery." Even amongst all this "flattery," these brands are still seeing amazing margins and predict sequential growth for many years. So is it possible for less well-known, SMEs from the U.S. to get in on the action without following the typical JV route?
I believe a progessive and forward thinking business owner/operator who manfuctures a unique product should shed the local market mindset and learn how they can become involved in global trade though even if they only operate a 250 employee organization. As we know, SME's power most economies, but lack the mega resources often needed to connect with foreign markets. SME leaders have many resources to begin this process that they rarely engage. Approaching your state chamber of commerce is a sure way to begin building prospects and learning how to easily navigate the world of cross-border trade. The internate-age has also spawned many respetable B2B and B2C sales platforms, which expedite the process further. The point being, more can be done by local U.S. business owners/operators to connect their unique or special products with this unsatiable Chinese marketplace. We've passed the days when only P&G, CocaCola, and General Electric could hack it in China. Everybody and their brother has an import/export company over here! Again, not your grandfather's China. Heck, not even your older brother's China.
a final dash of Salt…
SME's need to get in on the game. Claiming to operate your local business with a global mindset does not mean you can simply read the Financial Times and watch the action play out amongst bigger and better competitors. Owner/operators producing novel products and even commodity products still have room to be part of the economic circus that is China and should make strident efforts to do so.
