Nowhere do the polar forces of globalisation and localisation converge as clearly as they do in the "Middle Kingdom", an ancient designation for China. Thirty years after the reform and opening-up policies of the post-Mao era, the 5,000-year-old civilisation is more global than ever before. But the pace of that change shrouds what we believe to be the critical success factor for multinational corporations in China: localisation.
As a longstanding trading hub, Asia has always been at the forefront of globalisation. Of the 60 "global cities" listed in Foreign Policy magazine's most recent Global Cities Index, 23 were in Asia and six in China. The combination of an upsurge in foreign direct investment, a rise in international tourism and greater access to technologies has heralded China's relevance to, and appetite for, globalisation in the 21st century.
Yet it is in this environment that localisation continues to flourish. And, in many respects, China is not alone. Across the world, ethnic conflict shows little sign of becoming extinct. In 2008, the Heidelberg Institute for International Conflict Research revealed that self-determination (the desire of a group to gain independence for itself) was the second leading cause of medium and high-intensity conflict around the world.
Today, there is a growing sense of national pride among many people in China. In Western media, for example, much of last year's civil unrest in Tibet was reported as a reaction to government policy. Here in China, it was quite the opposite, with some Chinese beginning to wear their national pride on their sleeve. Quick-acting netizens created a website, "anti-CNN.com" protesting at some international media's use of cropped photos believed to inaccurately portray the situation. And more literally than metaphorically, 2.3 million Chinese added the "I (heart) China" logo to their usernames on MSN's popular chatting application in one day. The impact was profound.
When rumours that respected French company, Carrefour, had contributed funds to the Dalai Lama's cause, the backlash was crippling. Fuelled by the fact that Tibetan independence protestors had reportedly disrupted the Olympic torch relay in Paris, there was a swift call for the boycott of French goods -- with Carrefour quickly becoming the number one target.
Carrefour's response was clear and precise. It issued its employees new uniforms bearing the colours and pattern of the Chinese flag and a cap labeled "Beijing 2008." And when, shortly after the Olympic Games, western China was hit by a devastating earthquake, Carrefour immediately donated 23 million yuan (US$3,382,353) to relief efforts -- the largest amount contributed by a French company in China. In some respects, it wasn't the size of Carrefour's donation that helped re-establish its position in the market. It was the absolute lack of ambiguity with which it did it. The company acted as a local company would have acted. It demonstrated compassion, generosity and good will in equal measure. And in China, that matters enormously.
Elsewhere, a local approach to the introduction of brands can be pivotal to commercial success. Like most consumers, the Chinese want to consume on their terms. Last year, Weber Shandwick was involved in the local roll out of the "smart fortwo", one of the first sub-compact cars to hit the market. Rather than take a global brand and apply global launch techniques, we started with "found objects" -- selectively choosing successful strategies from other markets that would be locally applicable. One such "found object" -- a smart fortwo-sized vending machine allowed shoppers to preview and register for a test drive of the automobile in malls -- originated in Japan. By coupling this with viral videos that re-imagined the smart fortwo, we tapped into China's burgeoning internet population and, as a consequence, generated more than a million online views of the new car.
Right now, the eyes of the world are on China. If Chinese GDP looks to show the slightest sign of incremental growth over and above market forecasts, international stocks surge. Put that into the context of negative growth across most other developed nations and doing business in China is more attractive a proposition now than it ever has been.
But the pitfalls of business in China are as deep as the opportunities are wide. Which means the rules are simple. Understand the nuances of Chinese culture and the aspiration of its people and their communities, and Western businesses will flourish. But to simply apply the tried and tested rules of other markets and assume they will work is to not only miss the point, but creates the prospect of long-term reputational damage that has far reaching consequences at home as well as abroad.
David Liu is managing director China for Weber Shandwick.
