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. Sohow do you get decision makers to pay attention to your brand start a podcastand invite your ideal clients to be guess on your show, learn more atsweetfish media DOTCOM, you're listening to the Beta, be growth,show a potcast dedicated ton, helping beeto be executives achieve explosivegrowth, whether you're looking for techniques and strategies or tools andresources. You've come to the right place, I'm James Carburry and I'mJonathan Green. Let's get into the show! Welcome back to the bee to be growthshow today we are joined by David Hartman. David is the principal at blue,King and partners, David Walcone, to the show, thanks very much it's greatto be here. Well, it's it's fantastic to have you on the show today. I knowthat you're associated with the Institute for the Study of businessmarkets we've got into feature a few of their officers actually on the show,and so that was how we got connected,...

...which is fantastic, because we had somegreat episodes with those guys today wher. I should be talking about threereasons: 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 beite's, going to be some very unique contents, where I think our listenersare 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 of Blue Canyonare ut you these days, wellwe're we're doing a lot of work in China. It it'sinteresting how the topic comes and goes as a topic at the at the top of ofcompanies be to be companies, especially at the at the top of theirlist. Um. There was a a huge flurry of activity when China was growing so fast as it made the headlines for slowingdown a little bit. The the interest waned a bit there. There were alwayscompanies that had issues, but the ones that were going over there had gottenover there and the need for outside...

...consultants, as I say, sort of leveled off well nowwe're seeing a lot of interest again, and I think I would characterize it ashaving hit the wall in some sense and that that's really what we're going tobe talking about today. What to do about about China when it's time torethink what you've accomplished so far. Well a D, and so you obviously havepersonal 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. Ihad a a Cliet at at a very early stage in my career, who was a Chinese companyback thirty years ago, and that company was interested in the outside world andopening up China. The people were very impressive and got to know them reallywell, and I just accidentally got there and it's been the the right of alifetime, of course, and no no economist could wish for anything...

...better than to see the change in thegrowth in the last thirty years in China and I've been working over thereever since the first time. I went all right, so you know e we're we'rethinking globally, we're thinking you know, world stage China's been in theheadlines, president trump's visit. What are some of the takeaways fromthat? Well it. It was really interesting to me that the invitationto President trump came right after the National People's Congress and and mostof your listeners have probably heard the the news headlines that SchujingPing was reappointed, which was no surprise at all, but no successor wasdesignated, which means that Shejing thing is in a very powerful, possiblypermanent position as as the head of the Communist Party and the Presidentof China. What does that mean? It means that China's reached a a level of maturity and power in theworld that they feel very confident and...

...the first thing they did after thatmeeting was have president Trunpcom for a visit so- and I think it's symbolicChinese, believe a lot in relationship. They believe that business is done by people who knoweach other. They think that politics is done by people who know each other. It's really critical that those leaders accept each other, as as having apersonal relationship that that's probably more important than all of thepolitics and the behind the scenes. Maneuvering of the policies is the factthat they've got some relationship and, and both sides thought it was importantto have this meeting right now. Yeah. It's an interesting point that you makeabout the value of of relationships, and you know that's a whole another canof worms that we could talk about in terms of okay. You know even here inthe: U S, you know what is the strength of your personal relationship worthwhen when it comes to business, but it's interest, it's an interestingcultural perspective that how much they,...

...how much value they put onrelationships- and I know you also had mentioned a little bit offline- thatChina's still a relatively immature market economy, it's it's an immaturemarket economy and it's a mature market economy. So it's it's interesting. You know there P theire aspects of theeconomy that that are mature and one of the thingsthat that oure clients are starting to wake up to and our clients tend to be very largecompanies established in China for a long time. They are waking up to thefact that oh well, growth is slow. China's no longer changing it. Quitethe rapid pace that it has there's a some level of maturity has been reachedand you know it isn't like the? U S: It's it's fascinating. So manycompanies went to China with their. U S, Business Model! Thei! U S productstheir! U S! Service Mindset, whatever...

...the case, may be and have convincedthemselves over a lot of years, that China will someday grow up and whenthey grow up they'll be like the United States and boy. We will really succeedthen, and what they've found themselves doing is positioning themselves at itat 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 n in many business tobusiness markets. You know it's still immature. There's a lot of change a surprise every day, still Wllwhen,I'm in China, it's it's the most fun that I have is big, surprise constantlyand yet, at the same time, it seems very clear that m China has has reacheda level of maturity at which it's not going to just become identical to a mature Western economy, so thatbusiness to business customers are...

...going to see their business boom andall the h 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 canbe a very critical time and that you know maybe American companies arereassessing Um their strategy in in China kind of you. Let's tease that out.What does that kind of mean? Well, I I think it. It means different things toevery company, of course, but in business to business relationships,especially the the Chinese are extremely practical, so a businesscustomer WHO's, a Chinese company making a product and let's take anexample of cellphones w. We worke as suppliers to cellphone, manufacturesthe Chinese companies, don't want components that have a tenure ofwarranty. They don't want components that have a five year, warranty they'rewilling to skip a lot of steps in...

...product development because they don'twant something unique and and Um. You know something that will wow thecustomers necessarily. What they want is good, solid products that they can sellat a reasonable price for the most part, and they don't want a warranty thatlasts three times as long as anybody in China keeps a Celphone, so thatpracticality leads to very fast movement to suppliers who are forced to react quickly to not produce bells andwhistles where those bells and whistles aren't valued, and I think that's beena real problem for a lot of the clientsthat we work with globally, when they they think about China, that they have always thought that very highlevel of engineering, a very high level of innovation, products that arebulletproof and iron, clad and don't require any service are going to winthe day. And in fact they don't. So...

...there there's a segment of the marketwhere they can win, but there's a much larger segment of the market that theyaren't even really seeing because it values very different things than the.U S. market or the European market would value. That was interesting, well,a D, and so you youd sort of Mengione. This idea of like very, very quickmovement. But I know you've also sort of made the point eeven before westarted recording today that China's growth is slowed, certain businessesthat Youve got used to China, beting sort of this groth engine for theirglobal sales are concerned. But what does that slowdown mean moving forward,and, and does that mean that China's sort of best opportunities are in thepast? I mean ha? Have People in the B Tob Space, um sort of missed theirchance? I would say that that's not at all true in, in one sense, China'sstill growing at six and a half or seven percent. That's the governmentstated goal. The slowdown was on...

...purpose. The break next beat of growth,ten percent a year for thirty years running as created environmentalproblems. It's created quality of life problems the government's veryconcerned about continuing to just grow so fast, without taking care of a lotof the the more important needs of the population. Now, such as beingconscious of pollution being conscious of safety and and all of those things that we takefor granted. On the other hand, while there'sthey've slowd down to seven percent, it is still seven percent and, and theeconomy is much bigger today than it was when it was growing at ten percentten years ago. So you know, that's that's a lot more dollars in growth.You know the opportunities are still there. It's certainly not early, butyou know, there's still, there's still a lot of the country of China. That isundeveloped. That's that's backward.

There are a lot of needs and the needsare needs of changing. You know the needs are for how can we provide asafer water supply by controlling the pollution? How can we do better at controlling air pollition,some of it's just regulations and numbers of cars, but there's also a a big push to get better technologies. There's need need for better medicalcare, so there is a push for better management methods ofof managing hospitals, companies that can focus on sectors of the economywhere China's really in great need are are going to see a lot of success,despite the fact that it's only growing at seven percent, wouldn't, wouldn't wegive anything to grow at seven percent for a while, so all right Sordina, then I do want tosort of touch on these three reasons:...

...to Rethink your position. Chinas is allum really fantastic information, but I know that you kindo had s me some keytakeaways that you wanted to make sure that we had a chance to share with ourlisteners. Yes, I you know, I would say that the three are very overlapping andthe first one I would think of is that if, if you've been in China for tenfifteen twenty years now and have seen the economy grow, overtime really fast, and if they'rebusiness to business customers in China haven't really come around to valuingwhat you offer by this point, they probably won't, and it may be time foryou to rethink how you've positioned yourself in the marketplace. The secondone is very related to that. If Your Business has hit the wall, in otherwords, you may have been growing really quickly. Your growth, his slowed down alot and you're still a small player compared to the size of the market. Youmay have been counting on a future in...

China that isn't going to happen. Inother words, it's it's not going to be just like the: U S, someday invaluing,the Tenur warranties in the m over qualified products, for the applicationthat they're going to be put to in in a business to business framework, and then, thirdly, and and very closelyrelated to those two is, if you're in the market and you're in a niche Um,where Youve you've gradually gone from being the only player in town, perhapstwenty 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 anyplace except the high unnice, where you are, if you don't understand where you don'tplay at all, if you don't understand the part of the market where you oftenlose, but occasionally when, as well as where you're a big winner in the market,your surprises in the future re going...

...to be negative because thosecompetitors are going to get better. Those markets are going to change and it's probably, for the most part, notgoing to be satisfactory to just sit back and enjoy the position that you'veestablished. For Yourself, even if that very high unsmall niche is enough foryou MHM yeah at makes a lot of sense. Well, David- and you know I know wedidn't- we didn't get to cover everything that you wanted to talkabout today. Obviously th R, there is so much information more than we couldpossibly 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 aregoing to get a lot out of today's interview and if any of them want toreach out, find out more about your experiences. Today's Today's topic, youfind out a little bit more about Lue Canyon Partners. What's the best wayfor them to go abowt doing that website is www. Lue Canyon Partners, Wale Oneword docom my email address and I would...

...encourage you to to reach out my emailaddresses D, David G as in global aces and Hartman at licenon partners. Dotcom,fantatic, well, Daven, TAK, you gein! So much of your time on today's episodeis a pleasure getting to talk to you. I hope you have a great rnstou day thanksvery much. It was a delight to ensure that you never miss an episode of the Bto b gross show subscribe to the show in Itunes, wher your favorite podcastplayer, this Garang tees that every episode will get delivered directly toyour device. If you'd like to connect with be to be executives from all overthe world make sure to join our private facebook community. There are someincredible conversations happening inside this group to join visit B. TA Bgrowth show tcom, slash FB. Thank you so much for listening until next time.

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