Robert Lawrence Kuhn explores the new silk road

So what makes you important to them? How do you know?
You have to have advisers, so that you know what the individual is looking for and a certain size company they’re looking to partner with. It’s not something that can be answered in generalities. Rather, it has to be in the specifics of the individual company. Look at it this way:  What does that company have? What is its competitive edge? How big is it? And what does it do?
If it’s a business that is generating revenue — $20 million, $100 million, $1 billion — keep in mind that some people in China are paying to get connections with companies of a certain size.
Then, you have to find the people on the other side where what your company does and what you have to offer is important to them. You have to target the content for people interested in the content, and then the size for that project that is appropriate. If you are building a factory or providing a service, you have to know what people want and what would make you important to them.
Because of my background in corporate strategy and mergers and acquisitions and now substantially in China, very quickly I could look at a company and say, ‘Here’s what you should be doing.’
There are people who can sense that, and they’re the ones you need to be working with as advisers in order to do it the right way.
Does it take a lot of self-analysis by the entrepreneur or CEO to get it right? What I mean by that is when companies think about their market strategy — the niche market they serve, the problems they solve, the solutions they bring to the table and how they can position themselves to compete here — does that translate well to how you should approach your business strategy in China?
Everything you do that’s good business in the U.S., you should do in China. Then you have other things layered on top of it. Everything is applicable because that’s just good business sense — strategy, environmental analysis, strengths, weaknesses, opportunities, threats. You’ll see where you’ve got it right and what works for you. Then in China, you have an additional factor — government.
But it’s more granular than that — it’s geographies, it’s companies that are competing, it’s the marketplace. When you are doing business in the U.S., the other companies are your competition and you analyze the competition. But in China, especially for a smaller company, most likely whoever you end up working with will want to do some sort of a partnership.
It may not be an equity joint venture; it may be licensing or joint marketing. There are a lot of structural opportunities, and with those, you are going to form relationships with other Chinese companies. Those relationships are very different than the relationships you would form in the U.S., so in addition to the analysis that you’ll do about why you should be doing in business in China, you must realize that, unless you are leading a large company, you are going to be partnering with someone.
What happens if you don’t find a good partner?
Finding that right partner is critical, and it’s your biggest decision. There are a lot of good stories and a lot of horror stories. Sometimes, people make a decision to partner with one company and give them exclusive rights to all of China. That may turn out to be a good decision. Or, it may turn out that the industry you’re involved with is a very regional industry and that decisions are made regionally.
So if your partner is a company from Guangzhou or Xiamen or Guangdong province and you want to do business down with Shanghai, forget it. The Shanghai people are not going to want to do business with a company that has a partner from Guangzhou and is considered a regional player. So you really have to be very sensitive about what you’re doing and who you’re working with before you make your decisions.
So you really need to spend a lot of time on the front end, analyzing all the factors involved, correct?
Certainly a lot of front-end work is necessary in terms of meeting people, getting familiar with the companies, governments and regions, and understanding how it works. I always advocate taking multiple paths before you begin to even think about making your decision. You should be looking at three or four different approaches — that can be different potential partners, different geographies. I like to work with different geographies, and again, it has to be something where you’re considered important.
If you work in a province, unless your company is doing $700 million or more, you’re not going to meet with senior leaders of that province. You may be working on a municipal level. It depends on who the entrepreneur is. And, there are different associations in China that promote entrepreneurship as opposed to fostering government, state-owned enterprises.
There are a lot of different ways you can do this; you’ve just got to get a feel for it before you really start to make decisions. You shouldn’t marry the first girl you date.