A Conflicted China - international market selection puzzle

Ed Marsh | May 23, 2012

A Clash of Cultures

International business initiatives often lead to challenging cultural experiences and valuable lessons learned.  We naturally anticipate that we will encounter cultural differences - between various export target markets, and of course between our home market and those we target overseas.

But how often do we stop to consider that culture is far from monolithic in any market?  Just as business differs between New York, Seattle, LA & Dallas, there are regional differences within other markets as well.  All of the BRIC countries are noteworthy for their astounding geographic and population scale (Russia perhaps less so the latter), and all have noteworthy differences between regions and large metros.

Those differences are balanced though, whether through acceptance or centralized control, to create a common identity and an apparently stable equilibrium.  Each country has a perceived primary national character.

An Additional Disrupter

Rapid growth however tends to disrupt that equilibrium.  As groups compete for the opportunities and wealth which emerging status accretes to a nation, invariably conflicts arise.  Those conflicts are both fascinating and instructive, but also potential "political risk" minefields.  Companies must carefully monitor trends within key export markets to anticipate and manage risks and opportunities.

I recently wrote about the perplexing and apparently self-destructive moves made by the Indian government.  Caught between global trends and domestic populism the government bounces between contradictory and damaging policies.

But debate surrounding the likelihood of a Chinese "hard landing" tends to drown out other discussions of the conflicts central to China's exploration of its role in the world.

"What the Chinese Want"

This headline from a recent Wall Street Journal essay should be more interrogative than declarative.  Indeed as the article outlines there are conflicting 'wants.' 

"In Chinese consumer culture, there is a constant tension between self-protection and displaying status...Positioning a brand in China...must address the need to navigate the crosscurrents of ambition and regimentation, standing out while fitting in....(but) material similarities between Chinese and Americans mask fundamentally different emotional impulses."

So some of the conflict is internal to the culture, but some derives from a nationalism - simultaneously jealous and envious.  Reminiscent of the officials shown in the doctored photo who wanted to be part of a project without really being part of it, a recent Economist article explores the tug-of-war between Chinese envy of western attributes and disgust for others.

The recent 'xenophobic rant' by a high profile CCTV presenter highlights the nationalist trends.  And concerns that "lower rates of growth (may) accentuate brooding social problems...and complaints at home, in turn, might tempt the Chinese government to channel popular anger towards that old bugbear, "outside forces", to vent these frustrations."

But the yang to this ying comes in the form of an ABC News report on the "new cachet of 'Made in America' goods."

To BRIC or not to BRIC?

Ultimately it's your business and your call - and international market selection often comes down to a gut call.  As the cachet increases, the potential market opportunity sweetens.  But as the internal conflicts grow, so does the political risk and the challenge of conducting stable, long-term business.

So sure, BRIC.  It would be irresponsible to consider a broad international business development initiative which didn't contemplate substantial activity in the BRICs.  But don't overly commit to those markets.  As you debate international market selection, consider the CIVETS, the Next 11 and others throughout Latin America, Western Africa, ASEAN and Eastern Europe which offer enticing opportunity and supportive demographics.

Contact Consilium Global Business Advisors to explore how we can help you strategize, implement and execute a comprehensive international business development program.  Our export assistance programs are ideal for SMBs eager to turn "accidental exporting" into a strategic focus.

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