McKinsey Says: When in China, Be Quick

Related entries: Business Issues, General, Risk & Law, Strategy

McKinsey often has clever insights in China. Although not everyone can afford to hire them, they do sometimes share their thoughts with the world. In a recent article, Gordon Orr of their Shanghai office looks at the importance of fast action in developing successful business strategy in China – something I often refer to on this blog.

The article notes that traditional, data-intensive approaches are hard in China, where information may be inaccurate, and quickly outdated, and where decision-making and implementation need to be flexible over time. Orr says:

    “For multinationals in China, strategy development needs to be fluid and adaptive. Companies need to identify when sudden industry “tipping points” will occur and, based on that understanding, stake out quickly a position ahead of the trend in order to maximise market share.”

He also notes that foreign companies need back-up, crisis management plans to be in place (in China and at head office) in case of sudden market or regulatory changes. And this is not just to plan for the down-side. He asks “What if China opened up the banking sector to full competition tomorrow?”. Good question! It may be unlikely…but in China, anything is possible.

Orr is also quoted on the same issue in “China CEO” (see this and a selection of China business books here).
as saying:

    “The pace of change is so fast [in China]…that, unless it is well articulated as an evolution, the corporate headquarters often find it hard to understand why the company had strategy A in China and now has strategy B”

The recommendation is for a “more analytical approach to strategy”, with the potential for rapid action in order to secure market leadership.

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