Time to Market and Guanxi

The IT market is getting faster and faster and China is facing a new era because nowadays suppliers want to get involved in the entire product chain and expand towards research and development and design part on one side, and on marketing and direct B to C selling on the other. What is still not clear today is the timing and the decision making effort that this will need.

Something you still don’t know and don’t own is inevitably slow and the two fields before and after the production (ring of the chain that Chinese suppliers know better than us) are definitely too slow.

The time to market from conception to the shelves is today between 6 months and one year for IT and Electronic products in the western world, but the funny part is that if you don’t have in your hands a “booming changing the market product”, but you follow the market redesigning the hottest product of the moment, you are always at least 6 month to one year later. And here’s where some speed is needed but still not affordable for now in China.

Imagine that Apple got us used to new product presentations every year and that they have so many services that still they need to present the product 3 to 4 months before it is actually on the market, and when it’s on the market (unless you are one of those crazy early adopters that queue in front of the store) you can actually have it in your hands after 6 months. The Apple watch will be a perfect case or that: expected 2 years ago, presented today, available in 6 months, in your hands in one other year.

The Chinese typical way of doing things is not working at all in the world that I described:

 

  • Ask to the designer to design the most futuristic and diverse product owning an old technology.

“Let’s make it different! Let’s make a mobile phone in the shape of a horse because it’s the year of the horse!”

  • Getting scared of the design and ask to design a much older product.

“What if we don’t sell? Maybe a mobile phone that looks like a horse is not functional!”

  • Taking this old design and change it to put some details that usually won’t work.

“Let’s put some Chinese tradition inside, let’s put the image of a horse on it!”

  • Ok, we tried but it doesn’t work.

“Let’s go back to the original old design and make a phone without the horse, but we have to make it with a big antenna because we have that technology and it’s cheap!”

  • Money with price positioning.

”Ok we came out with a monster, but at least we can try to sell it at double price if there’s somebody who believes our story!”

 

This is the usual way to conceive and develop products in China and the result hits the market late with a terrible quality and sometimes with a high price. Basically bad timing + bad quality + bad functionality all together.

So what will happen? Where can this attitude take Chinese suppliers that want to become real companies and make real products?

Again Chinese suppliers have a critic decision for their future to take: if they will learn how to speed those rings of the chain that they don’t own China will maybe loose its production capabilities stolen by Africa or taken back to other western countries, but will be the place for incubators, research and development and the new design compartment of the world.

On the other hand if due to language issues or their attitude they won’t win this challenge they will loose the entire game because nowadays a lot of suppliers are going “all in” and investing everything they have to be part of that world.

One of the worst habit that Chinese production chains have to get rid of, is called “Guanxi”. It’s basically a good Mafia, where friendships and relations are a strong issue in choosing suppliers and where dinners and gifts (and money, a lot of black money) can give you access to the best works or to the best contracts. Time to market and Guanxi are both together a very new and old face of the same coin.

The problem is that whenever you are talking about interior design you can choose your architect because he offers you dinner or he gives you back a percentage (if you are a government own company) and you won’t do anything terrible; yes you will have a terrible hotel but nobody will care but the few clients. On the opposite, when you are talking about mass production if you get your plastic mould from a friend that doesn’t know what he’s doing or your processors from a guy that was in school with you studying philosophy, you will probably put on the market thousands of unsellable, ridiculous products.

Here where Guanxi should leave the place to quality control, but this is a totally different chapter of the story.

2016-10-24T19:16:19+00:00