Global CRM

Global CRM

Here is a great link offered by Harvard Business School's Working Knowledge e-newsletter, profiling the Chinese consumer. Which is to say, they profile the affluent, urban Chinese consumer: They're easier to find, and they buy.

One warning about this content, though: As smart as the guys at Harvard may be, the authors didn't flinch (when they should have) when they used the phrase, "If only 2 percent of this total estimated market were to buy cars in the next two years ... ". That's a tell-tale phrase that someone's trying to sell you something. Every crazy business plan has a phrase like that in it. It's not that you shouldn't look at things like marketshare, but to do business in China, you have to assume that it does not represent a mass market for many, or even most, products. You should be asking, 2 percent of what?

Assume that you'll be competing with existing products in multiple niches defined by characteristics you do not yet understand. When you consider the Chinese market this way, that fraction of marketshare that would make you enormously wealthy in your business projections turns out to be far tinier.

You may get lucky. But one of the reasons China gets so much FDI (according to a recent academic study by Michael Nicholson of the FTC's Bureau of Economics) may be that direct investment is a hedge against political, regulatory and cultural risks (in Nicholson's analysis, the focus was on IP theft). A key source to find out more is Horstmann, Ignatius and James Markusen's "Licensing versus Direct Investment: A Model of Internalization by the Multinational Enterprise," which appeared in 1987 in the Canadian Journal of Economics.

In short, so much money may be flowing into China from the outside because it is NOT a place you can just "get lucky" -- unless you don't mind that the variability in luck has downsides as well as upsides.

A little bit of homework goes a long way.