B2B sales in China. It used to be mystifying – then became complicated and frustrating – and is now bordering on impossible. We’re not talking about putting a few pieces of office equipment in a local shop — we’re talking about MNCs, SOEs (State Owned Enterprises) and distributors who can put your product onto local retail shelves. In other words, we’re talking about the people you want as your customers during a global recession.
The problem used to be figuring out the identity of the true decision-maker. Now it’s about figuring out which team decision-makers is winning the corporate power struggle within your prospect’s company.
In general terms, there are three groups of players that you have to understand:
Overseas office / global HQ.
Local top-level decision makers (MDs, owner, department heads)
Local bureaucracy (HR/Purchasing)
The problem is that these groups tend to compete with one another and base their purchasing decisions on widely varying criteria that don’t necessarily have anything to with the actual needs of their organization. On the bright side, internal communications is often so poor that you can tell different people completely different things and no one will ever find out. Maybe. The downside? You’re selling to groups with widely different perceptions of value.
Who are these people or groups?
- Global HQ or centralized decision makers.
These people are not in China. They tend to not know – or even care – about market realities over here. For many China-based SMEs or departments, it is very hard to make this sale since they have global operations and only seem to deal with international giants. The good news? While it’s hard to make the sale, it is much easier to get the deal. Stop selling direct and look to partner with companies that are strong near the HQs– but weak or building in your own backyard. There are plenty of smaller “global” companies that are just starting to get their China ops off the ground – or trying to rebuild after initial difficulties. Don’t be intimidated by international giant consulting comapnies. China standards are rising quickly, and many respected names are quietly reaching out to high-quality subcontractors on the ground in China’s business centers. Hint – fast growing third & fourth tier cities are good bets.
- Local Top-Level Decision Makers.
The good news – this is your house. These are people just like you – ex-pats, returnees, and overseas Chinese who speak your language. They ‘get’ the local business environment, know that international SMEs and entrepreneurs deliver the right quality at the right price, and honestly believe that you are the answer to some of their biggest problems. They understand your situation – and your value. The bad news – there are relatively few of them and they are constantly under fire from Global HQ and local-locals who want their power (and their jobs). Keys here: Sell the end result (solutions to their worst problems) – and the control (make them comfortable that you are ‘their guy’ and won’t go around them to Global HQ).
- Local Bureaucrats – HR & Purchasing departments.
Dynastic eunuchs with better haircuts. Very tough – and they are on the rise. Bad news – there are more of them then ever, they fit in with Global HQ’s cost-cutting strategy – and they tend to be fussy and resentful of westerners, overseas Chinese, returnees, other local Chinese, and just about everyone else. They are still getting informally compensated by their friends who try to compete with you. But the worst part is that stamping the contract is the only real power they get to exercise. Good news? They are getting more and more sensitive to quality and scheduling. In many cases their own network has let them down in the past, and they are very wary of looking foolish again. They often fill the role of “influencer” or “implementer” – and not the “decider” or “initiator” that they say they are. With these folks, you want to sell to their ego first. Play to their sense of middle-class respectability and their position within the international community. These are the people you network with at the AmCham functions.
General China B2B sales advice:
Spend the early part of your negotiating cycle determining how decision gets made. Focus your energy on the ones you have a shot at. Understand who really makes the decision.
Don’t sell to two groups at once. Sell twice within the same organization. Global HQ overseers care about total cost of ownership (TCO), warranties and guartantees. Mid-level managers and country heads will focus on quarterly (or monthly) bottom line profits. Local locals focus on price and terms. Don’t try to convince locals that TCO is what they should care about. Don’t complain to COOs and CFOs in New York about how difficult it is to deal with their China-based reps. You’ll be right, but poor.