The rapid evolution of China’s business landscape requires executives to regularly evaluate their channel setup if they want to stay ahead of the competition. Operating with the most efficient channels to capture growth becomes increasingly important as executives struggle to hit their targets amid increased volatility, a China slowdown, and rising competition.
China’s market has unique characteristics that can pose challenges for executives during the channel strategy evaluation and execution process. FrontierView’s Senior Researcher for Asia Pacific, Josef Jelinek highlights three key challenging characteristics of the Chinese market that executives need to overcome to win in the region.
1. The Rapid Growth of Digital in China
The emergence of digital solutions in China caught many multinational corporations by surprise. While digital is not unique to China, its substantial development was unexpected; digital is now becoming a significant channel in China. New technologies, services, and platforms have left many MNCs struggling to keep up. Executives no longer have the luxury of long evaluation and implementation periods; they must have the right people and the right strategy in place to leverage opportunities, or risk being left behind.
2. China’s Cultural Nuances
While every culture operates differently in their markets, China’s cultural nuances are generally more complex and difficult for Westerners to comprehend. Close-knit relationships between internal sales staff and indirect sales partners can impede objective partner selection and performance evaluation, complicating decisions surrounding transition options.
Chinese desire to avoid confrontation often makes for an indirect communication style, resulting in an unwillingness to have difficult conversations with partners around termination. By contrast, more direct Western styles of communication can often elicit an emotional response from Chinese partners when they are terminated.
3. China’s Rapidly Evolving Market
MNCs that flooded into the Chinese market to capture growth now find themselves behind the curve as the rapidly evolving landscape has left them with business models that are no longer aligned with the market. Customer preferences, technologies, channels, competition, and government policies are all changing constantly. While MNCs do not want to continuously update their go-to-market strategies, they will need to adjust them more often than needed elsewhere.
Internal alignment is critical during rapid change, as is the ability to project where the market will turn next. Executives need to set an appropriate channel vision and assess their partners’ capabilities against this strategy.
To navigate China’s unique channel transition challenges, we recommend executives conduct regular channel strategy reviews to keep up with the shifting external environment. Read FrontierView’s two-part series on effectively evaluating and executing channel transitions to avoid business disruption and continue to win in China.
To purchase the full 37-page Channel Transitions in China report with an in-depth analysis of the challenges posed by the current Chinese landscape and a guide to overcoming these challenges, please visit our online store.
FrontierView’s Asia Pacific team is at the forefront of key trends impacting businesses across the region. If you would like to discuss your channel management needs with a FrontierView expert, contact us today to connect with a team member.