China may be frustrating to enter, but for those with patience, persistence and willingness to adapt to varying conditions across the continental country, it can end up being a game-changing market.
That was the consensus during a panel discussion on “Doing Business in China: Key Insights for the New Year” organized by the Confucius Institute at Georgia State and held in collaboration with the Association of Chinese Professionals Atlanta and the World Trade Center Atlanta.
“The opportunity is huge, but you must walk softly. It’s so unique that any willing entrepreneur should go with faith and learn from the experience,” said Ahmet Bozer, executive vice president of Coca-Cola Co.
Mr. Bozer likened entering China to the first time he took a company public and was presented with 16 pages of disclaimers listing everything that could go wrong.
“You’d look at that and think that no one in their right minds would ever do it. It’s the same going into China. If you look at it from the outside you could get really discouraged, but our experience has been the opposite,” he said. Coca-Cola entered China in 1927 and re-entered in 1979. Today it is its third largest market behind the U.S. and Mexico.
Brushing off worries about China’s recent economic slump, Mr. Bozer said it was the natural cycle of a country slowly and sometimes painfully entering the world economy, with all the reforms that entails in a society so driven by government planning. Complicating its efforts to shift to a consumption-led economy are an urban-rural divide, aging population, vast income disparities and the varying cultures, languages and ethnicities within its borders.
“You have to look at China almost like a continent. When we do business in the EU, we have a different strategy for France than Romania. Each province feels like a separate country,” he said. “Regardless, China is ready for international investment. What you are seeing is a persistent march toward the free market.”
Delta Air Lines Inc. has experienced the complexity of business in China as it has invested over the past decade.
“It can be the most frustrating place to get anything done and regardless of where you are on your path, it is a humbling experience. You have to be open to continually learning and adjusting your strategy,” said Jennie Ho, managing director of specialty sales and Canada for Delta Air Lines.
Delta is navigating these challenges by working with two Chinese airline partners in its efforts to give travelers more choice of destinations. The company bought a 3.55 percent stake in SkyTeam partner China Eastern Airlines for $450 million last July.
“The airline business is notoriously regulated and, without these partnerships, we wouldn’t have a voice. All of our ongoing partners also open up internship programs in every department,” she said, making a nod to the airline’s efforts to understand Chinese consumers better and recruit more local talent.
Coke also started hiring more Chinese leaders, especially women.
“Almost all of our leaders were ex-pats and the Chinese didn’t feel they had a chance to rise to the top. It was a missed opportunity,” Mr. Bozer said.
Today 60 percent of the leadership in China is local and two mid-level women just were brought to Atlanta for a few years of leadership training, he said.
That’s part of cultivating a relationship based on mutually rewarding, trusting relationships that focus on deeper ties than just making money quickly, Mr. Bozer said.
Not only did Coke focus on its strategic partnerships, but it opened a R&D facility in Shanghai.
Panelist John Ling, managing director of investments for China for the Georgia Department of Economic Development, said the relationship works both ways, as Chinese businesses are looking to smaller U.S. cities to set up factories and buy raw materials.
“We in the Southeast haven’t done a good job of collaborating with each other. There may be a project that won’t work in South Carolina but it might in Georgia,” said Mr. Ling, who formerly worked for Georgia’s neighbor. “Cost is driving Chinese interest. We want these companies to know that we want to see them prosper and that we’re open for business.”
One example is Steven Zhen Xu, founder and president of U.S. Cabinet Depot in Acworth. He opened his business in 2012 and had $20 million in revenues and 27 employees; in 2015 he had $40 million in sales and 43 employees. He predicts that in 2017 his revenues will be $100 million, “and beyond that, who knows? The U.S. is a good opportunity for me.”