Partnering with China
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George Lossius, CEO of AIM-listed UK software and services business Publishing Technology, looks back at the company's expansion into China back in 2011 and explains how best to tackle the move.
China is certainly a mouth-watering prospect to the SME business. The engine house of the world with a population of 1.3 billion, China seems to offer an opportunity for everyone and a market for everything.
Within my sector this is especially true – as the Chinese publishing industry is growing into one of largest in the world and certainly has the fastest growth rate. Publishing Technology is a provider of technology and business development services to the publishing industry, and we are already an international business with officers in the US, Latin America, Australia and India.
Five years ago, we started to set our sights on servicing the Chinese publishing industry and last year the vision finally became a reality.
Doing your homework
I had considered establishing a Chinese presence for the company for a few years, but hadn’t moved beyond the developmental stages. In such an expanse of possibility, I realised a secure, financially viable opportunity must be identified to justify the investment and guarantee success in this complex market.
During those years we attended conferences, spoke to publishers and consultants, quizzed my Chinese contacts, and probed my most trusted colleagues and advisors – all to confirm there was a marketplace and a gap that we could fill. I immersed myself in the minutiae: I took nothing at face value, delving deep into the mechanics of the publishing market in detail, studying competitors, locations, logistics, revenue forecasts and potential clients in order to ensure I had an proper understanding of what our Chinese business would look like. Even so, the last year has thrown up many new aspects I had not seen and many surprises, mostly positive.
While it seemed like slow progress, it is clear now that these years of research, contact building and time invested in the Chinese market were indispensable to our current rapid success in the country.
Something else I learnt during this time was that on-the-ground knowledge, contacts and understanding is vital for success. Whilst I have a very international background, I quickly realised that my knowledge did not extend to being able to master business in China. I knew we had to find the right local business partner and we were very fortunate to meet Helen Sun, a Chinese academic and publishing professional looking to undertake a new challenge.
Sun, with her fantastic breadth of knowledge of the national and international publishing community, unrivalled contacts and knowledge of publishing in China, not to mention an understanding of the technological side of publishing, was a brilliant find. In addition to her credentials, she had worked for 10 years in the UK, and had returned to China to become a publishing entrepreneur. Her passion for our business and her enthusiasm for making the venture a success, shone through.
Like Latin America and India, where I have also established a presence for the company, China has a different business psychology to the familiar Western models. No CEO can immediately be aware of all the cultural intricacies inherent in a country’s way of doing business, but one must go in with an open mind and an understanding of one’s own vulnerability, a consciousness of difference – or a business will stumble before it has even started.
I noticed that unlike the strict contractual obligations of US and UK business cultures, the Chinese have a more liberal attitude. Tactical alliances and gestures of partnership are statements of goodwill, and do not necessarily become defined strategic movements until your business actually starts. It’s a different mind-set, and one that Western CEOs must orientate their thinking towards, and another reason why having a local business partner who knows the lay of the land is invaluable.
Another key aspect to remember, and this is especially true in the publishing world, is that in dealing with the Chinese, you are essentially dealing by proxy with the Chinese government. Taking on-board government sensitivities is intrinsic to making any venture work and why no venture can realistically work there without a Chinese business partner to guide you through the process.
One year on
A year has now passed since we launched in China. Incredibly, the first year of operation has seen relatively smooth running and growth ahead of plan. It has not been easy but the time investment into getting the groundwork right and efforts to find the right business partner have certainly paid off.
Just weeks after having launched in China, we signed a landmark partnership with the China National Publications Import and Export Corporation (CNPIEC), the largest to importer of publications, to join forces on a new project called the Digital Gateway.
It has been an incredibly positive experience and one that I would encourage other CEOs to pursue, should the opportunity arise. Being open to the differences between cultures and open to the way businesses evolve over time is a key factor in this success.
Publishing Technology China has followed a slightly different course than the one our business plan envisioned, we’ve responded to what’s around us and pursued opportunities as they have presented themselves. A successful partnership with China, with anyone, requires flexibility, endurance, vision and, most of all, relationship building.
I would counsel SMEs considering entering the Chinese market only to do so if they are in for the long haul. It is too complex a market to target to make a quick buck but if you are able to play the long game, and see a market for your company in China then it is worth the investment of time and resources to get the strategy right.
Embracing a wholly new market is a rare and exciting thing, and with China becoming an ever more dominant economic force it is, in my opinion, a wise move for many. By putting my faith in research, attention to detail and an excellent business partner Publishing Technology China is flourishing.