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 growthshow, 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 tothe right place. I'm James Carberry and I'm Jonathan Green. Let's get intothe show. Welcome back to the BE TOB growth show. Today we arejoined 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. Iknow 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, andso that was how we got connected,...

...which is fantastic because we had somegreat episodes with those guys. Today we're actually talking about three reasons to rethinkyour position in China and I don't think we've actually I don't think we've everhad an episode quite like this. This is going to be this is goingto be some very unique contents or I think our listeners are going to geta 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 atblue can interrupt you these days. Well, we're doing a lot of work inChina. It's interesting how the topic comes and goes as a topic atthe at the top of companies be to be companies, especially at the atthe top of their list. There was a huge flurry of activity when Chinawas growing so fast. As it made the headlines for slowing down a littlebit the the interest waned a bit. There were there were always companies thathad issues, but the ones that we're going over there had gotten over thereand 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 Iwould characterize it as having hit the wall in some sense and that that's reallywhat we're going to be talking about today. What to do about about China whenit's time to rethink what you've accomplished so far. Well, and soyou obviously have personal experiences in China. Maybe you can tell us a littleabout that. Yes, I'm an economist by training and I accidentally got involvedwith China. I had a client at a very early stage in my careerwho was a Chinese company back thirty years ago, and that company was interestedin the outside world and opening up China. The people were very impressive and gotto know them really well and I just accidentally got there and it's beenthe right of a lifetime, of course. And No, no economist could wishfor anything better than to see the...

...change in the growth in the lastthirty years in China. And I've been working over there ever since the firsttime I went. All right, so you know, we're thinking globally,we're thinking, you know, world stage. China has been in the headlines PresidentTrump'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 afterthe National People's Congress, and most of your listeners have probably heard the newsheadlines 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 avery powerful, possibly permanent position as the head of the Communist Party in thepresident of China. What does that mean? It means that China's reached a levelof maturity and power in the world that they feel very confident, andthe first thing they did after that meeting...

...was have president trump come for avisit. 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 thinkthat politics is done by people who know each other. It's really critical thatthose as leaders accept each other as as having a personal relationship. That's probablymore important than all of the politics in the behind the scenes maneuvering of thepolicies, is the fact that they've got some relationship and and both sides thoughtit was important to have this meeting right now. Yeah, it's an interestingpoint that you make about the value of relationships, and you know that's awhole nother can worms that we could talk about in terms of okay, youknow, even here in the US, you know what is the strength ofyour personal relationship worth? When, when it comes to business, but it'sinterest. It's an interesting cultural perspective that...

...how much they how much value theyput on relationships. And I know you also had mentioned a little bit offlinethat China still a relatively immature market economy. It's an immature market economy and it'sa mature market economy. So it's interesting, you know, their puttheir aspects of the economy that that are mature. And one of the thingsthat that our clients are starting to wake up to, and our clients tendto be very large companies established in China for a long time, they arewaking up to the fact that, oh well, growth has slow China isno longer changing at quite the rapid pace that it has. There's a somelevel 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, andhave convinced themselves over a lot of years that China will someday grow upand when they grow up they'll be like the United States and boy, wewill really succeed them. And what they've found themselves doing is positioning themselves atit at an extreme high end of the market, for example, where thecountry really has matured a lot and it really hasn't gotten to be like theUnited States and in many business to business markets, you know, it's stillimmature. There's a lot of change to surprise every day. Still when I'min 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 reacheda level of maturity at which it's not going to just become identical to amature Western economy, so that business to...

...business customers are going to see theirbusiness boom and all the Chinese competitors go out of business. It's not goingto be that way. Well, okay, so this is this is kind ofwhat I'm taking away, is that this can be a very critical timeand that, you know, maybe American companies are reassessing their strategy in Chinakind of. You know, let's tease that out. What does that kindof mean? Well, I think it means different things to every company,of course, but in business to business relationships, especially the Chinese, areextremely 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 phonemanufactures. 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 toskip a lot of steps in product development...

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

...going to win the day, andin fact they don't. So there's a segment of the market where they canwin, but there's a much larger segment of the market that they aren't evenreally seeing because it values very different things than the US market or the Europeanmarket would value. That's interesting well. And so you had you had sortof mentioned this idea of like very, very quick movement. But I knowyou've also sort of made the point even before we started recording today, thatChina's growth is slowed certain businesses that you've got used to China being sort ofthis growth engine for their global sales are concerned. But what does that slowdown mean moving forward and and does that mean that China is sort of bestopportunities are in the past? I mean, have people in the BOB space sortof missed their chance? I would say that that's not at all trueand 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 breaknecktspeed of growth of ten percent a year for thirty years running as created environmentalproblems, it's created quality of life problems. The government's very concerned about continuing tojust grow so fast without taking care of a lot of the the moreimportant needs of the population now, such as being conscious of pollution, beingconscious 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, itis still seven percent and and the economy is much bigger today than it waswhen 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 stillthere. It's certainly not early, but you know there's still there's stilla lot of the country of China that...

...is undeveloped. That's that's back wherethere are a lot of needs and the needs are needs are changing. Youknow, the needs are for how can we provide safer water supply by controllingthe pollution? How can we do better at controlling air pollution? Some ofit's just regulations and numbers of cars, but there's also a big push toget better technologies. There's need need for better medical care. So there isa push for better management methods of managing hospitals companies that can focus on sectorsof the economy where China is really in great need, are going to seea 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 oftouch on these three reasons to rethink your...

...position in China's is all really fantasticinformation, but I know that you kind of had some key takeaways that youwanted 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 veryoverlapping, and the first one I would think of is that if you've beenin China for ten, fifteen, twenty years now and have seen the economygrow over time really fast, and if your business to business customers in Chinahaven't really come around to valuing what you offer by this point, they probablywant and it may be time for you to rethink how you've positioned yourself inthe market place. The second one is very related to that. If YourBusiness has hit the wall, in other words, you may have been growingreally quickly, your growth has slowed down a lot and you're still a smallplayer compared to the size of the market. You may have been counting on afuture 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 tenyear warranties in the over qualified products for the application that they're going to beput to in a business to business framework. And then thirdly, and and veryclosely related to those two, is if you're in the market and you'rein a niche where you've you've gradually gone from big, the only player intown perhaps twenty years ago, to being the very high end player in amuch bigger market. If you don't understand the whole market, if you're nota participant any place except the high end niche where you are, if youdon't understand where, you don't play at all. If you don't understand thepart of the market where you often lose but occasionally when as well as whereyou're a big winner in the market,...

...your surprises in the future going tobe negative because those competitors are going to get better, those markets are goingto change and it's probably, for the most part, not going to besatisfactory 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 youknow, I know we didn't. We didn't get to cover everything thatyou wanted to talk about today. Obviously there is so much information more thanwe could possibly cover in in fifteen minutes, but I think this was a fantasticstart. I know I got a lot out of today's interview. Iknow our listeners are going to get a lot out of today's interview and ifany of them want to reach out find out more about your experiences, today'sToday's topic, you know, find out a little bit more about Blue Canyonpartners. What's the best way for them to go about doing that? Websiteis wwwl Canyon partners all one wordcom my...

...email address, and I would encourageyou to reach out. My email addresses D David J as in global H'sand Hartman had blue canyon partner'Scom. Fantastic. Well, David, thank you againso much for your time on today's episode. Is a pleasure getting totalk to you and I hope you have a great rest your day. Thanksvery much. It was a delight. To ensure that you never miss anepisode of the B toob growth shown, subscribe to the show in Itunes oryour favorite podcast player. This guarantees that every episode will get delivered directly toyour device. If you'd like to connect with B tob executives from all overthe world, make sure to join our private facebook community. There are someincredible 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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