Companies that work successfully in China must first develop a clear understanding of its complex markets, appreciate the diversity of the local customer base, and come to terms with the country’s relatively poor protection of intellectual property rights. Those who can puzzle out the subtleties of China’s multi-tier customer segments, understand their tastes and preferences, and create distinctive products that meet local needs will benefit from the shan zhai mind-set when serving China’s emerging breed of consumers. On the one hand, shan zhai companies can be formidable competitors. On the other hand, they could become business partners or even acquisition candidates. The key is to keep an open mind.
- Edward Tse is Booz & Company’s managing partner for Greater China, specializing in definition and implementation of business strategies, organizational effectiveness, and corporate transformation. He has assisted several hundred companies — headquartered within and outside China — on all aspects of business related to China and its integration with the rest of the world.
- Kevin Ma is a principal with Booz & Company in Greater China. He has extensive experience with multinational corporations and Chinese companies in the travel and tourism and high-tech industries in the Asia/Pacific region, with a focus on Greater China.
- Yu Huang is a senior associate with Booz & Company based in Beijing. He has more than 10 years of experience consulting in the financial-services and high-tech industries, specializing in corporate strategy and project management.