A timely article in The Wall Street Journal (that I only recently got around to reading): “The future’s not here.” American business people once saw China as dynamic, exciting and wide open. Not anymore.
To which I ask: When was China ever “wide open?”
For years, American entrepreneurs saw a place in which they would start tech businesses, build restaurant chains and manage factories, making potentially vast sums in an exciting, newly dynamic economy. Many mastered Mandarin, hired and trained thousands in China, bought houses, met their spouses and raised bilingual children.
Now disillusion has set in, fed by soaring costs, creeping taxation, tightening political control and capricious regulation that makes it ever tougher to maneuver the market and fend off new domestic competitors. All these signal to expat business owners their best days were in the past.
Let’s not blame the recent trade and tariff issues. China is a ruthlessly competitive market that, like so many countries, tilts the playing field in favor of its home-grown companies. And intellectual property is (to put it mildly) not well protected. I remember when Bill Gates traveled to China years ago to complain about the epic levels of piracy of the Windows OS (at the time, Windows was the leading operating system in China and yet Microsoft saw little in the way of revenues).
Other companies that have struggled in China include Cisco, Amazon and WalMart. And let’s not overlook the fact that Google and Facebook are still desperately trying to squeeze their way in without selling their souls (and are close to doing just that).
One thing I have been telling companies in the early stages of going global for more than a decade now — if China is your first overseas market, perhaps you should select another. Going global is difficult, no matter what country or culture you target. But add in one of the most heavily and capriciously regulated intranets (China’s Internet is in truth an intranet) and you face a very steep hill to climb. That’s not to say you shouldn’t target China, but go into it with eyes open and a long-term game plan.
And, frankly, that’s true for any market. Every new market is a new frontier — with new rules, cultures, competitors. The experience of going global can be equal parts exhilarating and terrifying. But it is most definitely not boring!
Speaking of… I’m now working on the next edition of the Web Globalization Report Card. Lots of exciting new developments which I will write about in the weeks and months ahead.