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Time for Chinese firms to adapt to new markets

By Zheng Yangpeng (China Daily) Updated: 2013-01-18 14:33

Consulting | Zheng Yangpeng

Within one week after he got his new job this year, Boston Consulting Group President and CEO Richard Lesser traveled to China "to be where the growth is", in his words.

China's growth was the subject of his talk with China Daily at the international management consulting firm's Beijing office. He especially focused on how the world has changed and how companies can learn to compete and grow in the global environment.

Time for Chinese firms to adapt to new markets

Richard Lesser, Bostn Consulting Group president and CEO 

Part of the change is China's rise, and Chinese companies' overseas expansion.

"Check out the number of Chinese companies in the Fortune 500" list of largest corporations, Lesser said. They represent "a batch of large companies with handsome business in every corner of the world".

Meanwhile, more and more Chinese small and medium-sized enterprises, dreaming about faster growth, are exploring the overseas market.

But there are questions: Do the largest companies necessarily become more efficient by gaining more global reach?

And do the SMEs necessarily stand a better chance to realize their dream by just becoming more active in other countries?

To them, Lesser has a word of advice: "Part of the reason for BCG's success is: The more the world changes, the more you can't use the past to guide the future."

Chinese enterprises, Lesser said, generally started on the basis of their low costs, but to compete globally, that is far from enough, although a winning strategy may still contain a cost element.

Instead, it is innovation, especially innovation based on the understanding of the local dynamics of other markets, that is more important, Lesser said.

At the beginning of their globalization, many companies regard overseas markets simply as new sales channels. They take what they already did and bring it into the markets they are developing.

The next step for these companies, however, is to recognize the local differences and adapt to these differences; in many cases, it is a different kind of business, and a different kind of offering.

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