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How to Make Your Business a Little Less in Debt to China

Updated on May 15, 2013

As Fareed Zakaraia said recently, “In times of economic crisis, power shifts to the creditors”. Indeed. And every day, Americans become more and more in debt, and on a national level, we become more indebted to China by the minute. According to the prevailing conventional wisdom, we are currently in an economic crisis. Treasury Secretary Timothy Geithner pointed out the other day that Europe might seem to be skipping along compared to the US, but in fact they are about to fall butt first into a Vietnamese tiger trap. Now you, the small business owner, the large business owner, or the employee worried about getting laid off, are worried about going under, and the only people there to save you are the Chinese. Oh no – not Communists!

Yes. Communists. But it’s not too late to get back on the right financial path. In fact, there are ways you can save more and keep a little farther back from China’s teat:

1. SKIP AIRPORT SECURITY. Some people like whips and chains, and most love a nice gentle massage, but nobody likes being groped by a Homeland Security officer in dirty plastic gloves in front of a thousand people. The best way to skip airport security, save time at the airport, and save money on business travel is to utilize web conferencing services. You better believe it – it’s the twenty first century, and if you have a business that lacks webinar software and has no idea what webcasting is, well, goodbye. See you when you try to start up another business, because without even the most rudimentary online video platform, you’ve made the decision to slowly kill your business. Business is 24/7/365 now, and with the technology that is available today, you better believe that right now somebody is gaining an edge on your business while you idle. Webcasting is not the future; it’s the present. If you look carefully at your bottom line, you’ll realize quickly that about half the business trips you make are unnecessary. Get with the times.

2. BUY DOMESTIC. Well, not everything; it’s been a long time since American muscle cars ruled the roost, so you will be forgiven if you choose an Audi over a Ford. Yet some of today’s most dependable international cars – Toyota and Honda – have plants right here in the USA. Detroit is still capable of producing great cars, and on the west coast companies like Tesla are making the electric car of tomorrow quickly into the electric car of today. If your business requires vehicles, try to buy a hybrid, and try to buy American.

3. LOVE THE CHINESE. Sure, it may seem intimidating that a nation of a billion people seems to be gunning for us, but they’re just people like you and me. They value their culture (even though there are a million KFCs and McDonalds all over China), and their economy is booming, but it won’t last forever. It’s an open secret that China is deceptive about the true value of their currency. Yet regardless of how China is viewed, on a personal and business level you have to view them as partners, not overlords. Try to develop your Chinese business interests in a way that is symbiotic and not parasitic, favoring the Chinese. Be partners.

4. WORK SMARTER, NOT HARDER. Sure, it’s an annoying buzzword, but how about some efficiency? Be smart, economical, and constantly adapt your business to be stronger than it was yesterday. Being smarter will get you a leg up on anyone, be it Joe’s Pizza down the street or a billion Chinese folk.

Can The USA grow past our differences with China and become the partners we should be?

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U.S. Federal Debt 1790-2012

Dollar Amount
For the past ten years, the United States federal debt has not gone down but went up.

3 Tips to Do Business Successfully in China

The big question is how come some western companies are able to successfully enter the Chinese market while the others fail? Doing business in the United States is not the same as doing business in China. We can’t apply the same business plan and method to different markets because things are operated differently based on history and culture. Here are three tips that may help you enter the Chinese market successfully.

1. Integration of the Value Chain and Transfer of Operations Center

These two components can’t be seen as a lightly matter because Danfoss, a Danish global producer of components and solutions for refrigeration and air conditioning, has successfully entered the Chinese market since 1996. They have reversed their integration of value chain to export their products and services from China to other parts of the world. In addition, most successful multinational companies have transferred their operations center to China. For example, IBM moved its global operation division from upstate New York to Shenzhen, China. This has improved IBM’s supply base as well as its clients supply chain.

2. Regional and Senior Managers was Given Enough Time to Develop the Business

If you’re a western company trying to enter a foreign company, it’s important to learn how to do business in that targeted country. You wouldn’t take a test before studying and doing homework to prepare yourself, it’s the same concept at doing business. It’s important to give managers enough time to set up and develop the business in China before fully engage the company to the market.

3. Steadiness and Coherence in Both Projections and Operations

There are two things you shouldn’t do when entering a new market. First, companies tend to be too optimistic and overly invested and end up taking too long to gain profits. Second, some companies are the opposite and they were too conservative. Entering the Chinese market is tough, but as long as you develop a great understanding of China’s background and adopt appropriate strategies, the payoff can be great.

Doing Business in China - A Pot of Gold?

5 Successful American Brands in China

There is no doubt that China has a lot of people and many companies see a big opportunity for their company to enter the market in China. I came across an article from 24/7 Wall St on “The Most Popular American Brands In China,” where the author talked about various American brands that have “made it” in China. I would like to share 5 of them that I thought was noteworthy to mention.

1. KFC

Market share: Most fast food stores (4,260 stores)

Industry: Fast food

Competitors: McDonalds, Subway, Wendy’s

KFC is operated by Yum! and is the largest fast food company in China. In 2011, Yum! opened 560 new KFC restaurants and plans to open another 700 restaurants in the coming year by the end of the fiscal year. Without adding the new KFC restaurants that opened last year, it has already doubled the amount of stores compared to McDonald’s, which has roughly 2,000 stores. According to Yum!, the China market accounted for 42% of its KFC segment’s profit in 2012.

2. Gillette

Market share: 70%

Industry: Personal products

Competitors: Schick

In 1992, Gillette entered the China market and joined forces with the Shanghai Razor Blade Factory. Currently, Gillette holds a 70% market share worldwide in men’s grooming. Gillette is made by Procter & Gamble that has dominated the Chinese market with other market leaders like Olay, Pampers and Tide. Between 2002 and 2012, Procter & Gamble’s net sales in China grew by an average of 17% annually and earned approximately $2 billion in revenue from China in 2012.

3. Starbucks

Market share: 61%

Industry: Specialty eateries

Competitors: McDonald’s, Pacific Coffee

Starbucks opened its first store in Beijing, China in 1998. Starbucks has over 800 locations in 60 different cities in China and plans to open more stores in the Asia Pacific region in the next five years to more than 40,000. McDonalds is their biggest competition compared to coffee sales. Starbucks’ number one position is in danger because Chinese coffee companies like the Pacific Coffee Company are catching up.

4. Apple

Market share: 83% (fourth quarter, 2012)

Industry: Electronic Equipment

Competitors: Samsung, Microsoft

Apple dominates the tablet market in China and last quarter of 2012 Apple’s iPad and iPad mini accounted for 83% of all tablet sales. Apple has several major suppliers in China and among them is Foxconn which has stirred up quite a bit controversy because poor working conditions. Although it was a controversial issue, it has created 40% more jobs in China.

5. General Motors

Market share: 14.7% (2012)

Industry: Auto manufacturers

Competitors: Toyota, Volkswagen

General Motors has the largest market share in China of any foreign auto manufacturer for nearly a decade. The company’s success comes from their multiple joint ventures including Shanghai Automotive Industry Corp. Group (SAIC) to gain access to the Chinese auto market. In 2012, the company and its partners sold a total of more than 2.8 million cars in China compared to 2.6 million cars in the United States. GM announced recently that it was building a $1.3 billion plant in China to produce Cadillacs in hopes to improve luxury car sales.

A Video on Wal-Mart's China Challenge


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