571: 3 Reasons to Rethink Your Position in China w/ David Hartman

ABOUT THIS EPISODE

In this episode we talk to David Hartman, Principal at Blue Canyon Partners.

There's a ton of noise out there. So how do you get decision makers to pay attention to your brand? Start a podcast and invite your ideal clients to be guests on your show. Learn more at sweet fish Mediacom. You're listening to the be to be growth show, a podcast dedicated to helping be to be executives achieve explosive growth. Whether you're looking for techniques and strategies or tools and resources, you've come to the right place. I'm James Carberry and I'm Jonathan Green. Let's get into the show. Welcome back to the BE TOB growth show. Today we are joined by David Hartman. David is the principal at Blue Canyon partners. David, welcome to the show. Thanks very much. It's great to be here. Well, it's it's fantastic to have you on the show today. I know that you are associated with the Institute for the Study of business markets. We've gotten to feature a few of their officers actually on the show, and so that was how we got connected,...

...which is fantastic because we had some great episodes with those guys. Today we're actually talking about three reasons to rethink your position in China and I don't think we've actually I don't think we've ever had an episode quite like this. This is going to be this is going to be some very unique contents or I think our listeners are going to get a lot out of it. But before we get into today's topic, David, maybe you can tell us a little about what you and your team at blue can interrupt you these days. Well, we're doing a lot of work in China. It's interesting how the topic comes and goes as a topic at the at the top of companies be to be companies, especially at the at the top of their list. There was a huge flurry of activity when China was growing so fast. As it made the headlines for slowing down a little bit the the interest waned a bit. There were there were always companies that had issues, but the ones that we're going over there had gotten over there and the need for outside consultants, as...

I say, sort of leveled off. Well, now we're seeing a lot of interest again and I think I would characterize it as having hit the wall in some sense and that that's really what we're going to be talking about today. What to do about about China when it's time to rethink what you've accomplished so far. Well, and so you obviously have personal experiences in China. Maybe you can tell us a little about that. Yes, I'm an economist by training and I accidentally got involved with China. I had a client at a very early stage in my career who was a Chinese company back thirty years ago, and that company was interested in the outside world and opening up China. The people were very impressive and got to know them really well and I just accidentally got there and it's been the right of a lifetime, of course. And No, no economist could wish for anything better than to see the...

...change in the growth in the last thirty years in China. And I've been working over there ever since the first time I went. All right, so you know, we're thinking globally, we're thinking, you know, world stage. China has been in the headlines President Trump's visit. What are some of the takeaways from that? Well, it was really interesting to me that the invitation to President trump came right after the National People's Congress, and most of your listeners have probably heard the news headlines that She Jing Ping was reappointed, which was no surprise at all. But no successor was designated, which means that She Jing Ping is in a very powerful, possibly permanent position as the head of the Communist Party in the president of China. What does that mean? It means that China's reached a level of maturity and power in the world that they feel very confident, and the first thing they did after that meeting...

...was have president trump come for a visit. So I think it's symbolic. Chinese believe a lot in relationship. They believe that business is done by people who know each other. They think that politics is done by people who know each other. It's really critical that those as leaders accept each other as as having a personal relationship. That's probably more important than all of the politics in the behind the scenes maneuvering of the policies, is the fact that they've got some relationship and and both sides thought it was important to have this meeting right now. Yeah, it's an interesting point that you make about the value of relationships, and you know that's a whole nother can worms that we could talk about in terms of okay, you know, even here in the US, you know what is the strength of your personal relationship worth? When, when it comes to business, but it's interest. It's an interesting cultural perspective that...

...how much they how much value they put on relationships. And I know you also had mentioned a little bit offline that China still a relatively immature market economy. It's an immature market economy and it's a mature market economy. So it's interesting, you know, their put their aspects of the economy that that are mature. And one of the things that that our clients are starting to wake up to, and our clients tend to be very large companies established in China for a long time, they are waking up to the fact that, oh well, growth has slow China is no longer changing at quite the rapid pace that it has. There's a some level of maturity has been reached and you know, it isn't like the US. It's fascinating. So many companies went to China with their US business model, their US products or US service mindset,...

...whatever the case may be, and have convinced themselves over a lot of years that China will someday grow up and when they grow up they'll be like the United States and boy, we will really succeed them. And what they've found themselves doing is positioning themselves at it at an extreme high end of the market, for example, where the country really has matured a lot and it really hasn't gotten to be like the United States and in many business to business markets, you know, it's still immature. There's a lot of change to surprise every day. Still when I'm in China, it's the most fun that I have is big surprise constantly. And yet at the same time it seems very clear that China has has reached a level of maturity at which it's not going to just become identical to a mature Western economy, so that business to...

...business customers are going to see their business boom and all the Chinese competitors go out of business. It's not going to be that way. Well, okay, so this is this is kind of what I'm taking away, is that this can be a very critical time and that, you know, maybe American companies are reassessing their strategy in China kind of. You know, let's tease that out. What does that kind of mean? Well, I think it means different things to every company, of course, but in business to business relationships, especially the Chinese, are extremely practical. So a business customer WHO's a Chinese company making a product, and let's take an example of cell phones. We've worked with suppliers to cell phone manufactures. The Chinese companies don't want components that have a ten year warranty. They don't want components to have a five year warranty. They're willing to skip a lot of steps in product development...

...because they don't want something unique and and, you know, something that will wow the customers. necessarily. What they want is good, solid products that they can sell at a reasonable price for the most part, and they don't want to warranty that last three times as long as anybody in China keeps a cell phone. So that practicality leads to very fast movement to suppliers who are forced to react quickly to not produce bells and whistles where those bells and whistles aren't valued, and I think that's been a real problem for a lot of the clients that we work with globally when they they think about China, that they have always thought that very high level of engineering, a very high level of innovation, products that are bulletproof and ironclad and don't require any service are...

...going to win the day, and in fact they don't. So there's a segment of the market where they can win, but there's a much larger segment of the market that they aren't even really seeing because it values very different things than the US market or the European market would value. That's interesting well. And so you had you had sort of mentioned this idea of like very, very quick movement. But I know you've also sort of made the point even before we started recording today, that China's growth is slowed certain businesses that you've got used to China being sort of this growth engine for their global sales are concerned. But what does that slow down mean moving forward and and does that mean that China is sort of best opportunities are in the past? I mean, have people in the BOB space sort of missed their chance? I would say that that's not at all true and in one sense China still growing at six and a half or seven percent. That's their government stated goal. The...

...slowdown was on purpose. The breakneckt speed of growth of ten percent a year for thirty years running as created environmental problems, it's created quality of life problems. The government's very concerned about continuing to just grow so fast without taking care of a lot of the the more important needs of the population now, such as being conscious of pollution, being conscious of safety and and all of those things that we take for granted. On the other hand, while there's they've slowed down to seven percent, it is still seven percent and and the economy is much bigger today than it was when it was growing at ten percent ten years ago. So you know, that's that's a lot more dollars of growth. You know, the opportunities are still there. It's certainly not early, but you know there's still there's still a lot of the country of China that...

...is undeveloped. That's that's back where there are a lot of needs and the needs are needs are changing. You know, the needs are for how can we provide safer water supply by controlling the pollution? How can we do better at controlling air pollution? Some of it's just regulations and numbers of cars, but there's also a big push to get better technologies. There's need need for better medical care. So there is a push for better management methods of managing hospitals companies that can focus on sectors of the economy where China is really in great need, are going to see a lot of success, despite the fact that it's only growing at seven percent. Wouldn't wouldn't we give anything to grow at seven percent for a while? So all right, so, David, then I do want to sort of touch on these three reasons to rethink your...

...position in China's is all really fantastic information, but I know that you kind of had some key takeaways that you wanted to make sure that we had a chance to share with our listeners. Yeah, so I you know, I would say that the three are very overlapping, and the first one I would think of is that if you've been in China for ten, fifteen, twenty years now and have seen the economy grow over time really fast, and if your business to business customers in China haven't really come around to valuing what you offer by this point, they probably want and it may be time for you to rethink how you've positioned yourself in the market place. The second one is very related to that. If Your Business has hit the wall, in other words, you may have been growing really quickly, your growth has slowed down a lot and you're still a small player compared to the size of the market. You may have been counting on a future in China. That isn't going...

...to happen. In other words, it's it's not going to be just like the US someday in valuing the ten year warranties in the over qualified products for the application that they're going to be put to in a business to business framework. And then thirdly, and and very closely related to those two, is if you're in the market and you're in a niche where you've you've gradually gone from big, the only player in town perhaps twenty years ago, to being the very high end player in a much bigger market. If you don't understand the whole market, if you're not a participant any place except the high end niche where you are, if you don't understand where, you don't play at all. If you don't understand the part of the market where you often lose but occasionally when as well as where you're a big winner in the market,...

...your surprises in the future going to be negative because those competitors are going to get better, those markets are going to change and it's probably, for the most part, not going to be satisfactory to just sit back and enjoy the position that you've established for yourself, even if that very high end, small niche is enough for you. HMM, yeah, makes a lot of sense. Well, David, and I you know, I know we didn't. We didn't get to cover everything that you wanted to talk about today. Obviously there is so much information more than we could possibly cover in in fifteen minutes, but I think this was a fantastic start. I know I got a lot out of today's interview. I know our listeners are going to get a lot out of today's interview and if any of them want to reach out find out more about your experiences, today's Today's topic, you know, find out a little bit more about Blue Canyon partners. What's the best way for them to go about doing that? Website is wwwl Canyon partners all one wordcom my...

...email address, and I would encourage you to reach out. My email addresses D David J as in global H's and Hartman had blue canyon partner'Scom. Fantastic. Well, David, thank you again so much for your time on today's episode. Is a pleasure getting to talk to you and I hope you have a great rest your day. Thanks very much. It was a delight. To ensure that you never miss an episode of the B toob growth shown, subscribe to the show in Itunes or your favorite podcast player. This guarantees that every episode will get delivered directly to your device. If you'd like to connect with B tob executives from all over the world, make sure to join our private facebook community. There are some incredible conversations happening inside this group. To Join, Visit Bob Growth Showcom FB. Thank you so much for listening. Until next time,.

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