OPINION: The vital role of meritocracy in taking Chinese brands global

A recent article in BusinessWeek talked about Chinese immigrant communities in Spain who were doing well economically but also faced criticism from Spanish natives for not assimilating with local culture.

I found this story very interesting and identify with it very much. I grew up in New York, and most of my friends' parents are part of the Chinese immigrant community, who endured long periods of hardship in order to achieve their American dreams. My own father was a part of this. His business required the patronage of the Chinese immigrant community, and was profitable enough to put me through expensive university education. To this day, my father does not speak a word of English, even after spending more than 20 years in America.

How does this relate to media and advertising?

We can draw an analogy between the closed-off Chinese communities overseas and the media landscape in China. The Chinese media players are standalone entities that cater only to Chinese consumers. Nothing wrong with that, if your ambition is to own only the Chinese market. But, if you have global aspirations, you need to think like a global player.

China operates on a different set of rules when it comes to doing business. Steve Ballmer of Microsoft once said to his top managers that “when it comes to China, the rulebook is out the window.” The lack of rules in China has spawned some of the craziest, most blatant copycat brands. Two funny examples are KMC and iPoen 7 below.

 
 

Guanxi and why it sucks

The one rule in China, a powerful and important one, that matters is “guanxi”: the all-mighty relationships you have with your business associates. It can have many names, from cronyism to nepotism and any other “isms” you can think of. Those with "guanxi" make it further in the business world, and those without are left behind in the dust. Therefore, in China it is better to have great "guanxi" with a mediocre business idea than to have poor "guanxi" but a great business idea.

The media industry in which we work is no exception to this rule. This is a typical introduction from a new media platform: “Hi, we are [insert new digital media’s name]. We’re China’s version of Facebook/YouTube/Hulu/Foursquare/Pinterest/Whatever. We can do this because we are backed by so-and-so who has GREAT guanxi with the government."

A friend of mine is the chief executive officer of one of the leading location-based services in China. When he met one of the founders of Foursquare at the CES, he was asked: “Hey, what’s your strategy of making it big in China?” He replied: “We copy everything you do, attract as many users as quickly as possible before you set up operations in China.”

Brands in China are unapologetic when it comes to stealing other company’s ideas. In a protected market like China, the copycat strategy often works. However, when these Chinese brands decide to go global, this strategy would be problematic. Without true innovation, copycat brands face challenges and difficulties in overseas markets. Coming back to the media industry, I don’t see any Chinese digital media brand that could easily succeed on a global stage at this moment. 

China is changing: Hello meritocracy

Rising labour costs in China are going to change Chinese businesses, with so many recent reports on labour issues and wage complaints at manufacturing plants in China. The disparity in incomes is reaching dangerous levels, and in order to maintain social stability, China will need to increase incomes (and thus labour costs) for the lowest-paid segments in society. This change will affect China’s low-cost advantage.

Therefore, China is slowly transitioning away from its reliance on manufacturing and turning its focus to innovation. Innovation is a merit-based concept. Those who have great ideas shall be rewarded by the market and those with mediocre ones will not be able to compete.

Innovation also requires talented people. Talent shortage is a severe problem that every industry has in common in China. I've learned to keep my eyes and ears on alert for talent and to fast-track highly talented individuals to the right places as quickly as possible. 

Talented Chinese youths

This brings me to the recent Coca-Cola story where Ogilvy & Mather used a Hong Kong design student, Jonathan Mak Long, for an OOH work. I really love this story because Ogilvy recognised a talented individual from his Steve Jobs tribute logo on the internet, contacted him and assigned him to develop something for one of the biggest brands in the world. Meritocracy at its finest! And there are more talented young individuals like Jonathan waiting to be discovered in China.

Think global, act local 

Before we can achieve real innovation in what we do, we need to break out from the closed-off way of doing business, break the role of "guanxi" and favoritism in relationships, break the tradition of copying others.

We need to celebrate new ideas created out of meritocracy. Only by giving hungry and talented youths the opportunity to shine will we see some great innovation in the near future. The Chinese were innovative once upon a time. We invented paper, printing, the compass and gunpowder. 

It’s the way we do business now that F’d everything up!