Our Challenge: Help our client acheive a leading position in China’s domestic computer market despite high barriers to entry

• Client: A major multinational computer hardware manufacturer (“ComputerCo”)

• Our Mission: To develop and implement a market entry strategy for ComputerCo’s manufacturing operation that focused on facilitating access to China’s domestic market.  The goal was to gain market leadership ahead of the client’s global competitors.

• Obstacles
  • Foreign invested enterprises were required to export a large majority of their manufactured goods, thus limiting access to domestic market
  • Export requirements were strictest for joint ventures (JVs) where foreign side had a majority stake and associated management control
  • Industry was plagued by widespread illegal imports, harming legitimate players and impeding industry’s development

Our Approach: The project used a three-pronged approach highlighting our integrated methodology combining research, strategy and implementation.

• Research (Industry Intelligence Group)
  • Policy Review: Detailed research of official policy in order to identify the main issues causing concern to the Ministry of Electronics Industry
  • Market Research: Analysis and assessment of major domestic markets by geography and key operational and management issues

• Strategy (Business Strategy Group)

  • Site and Partner Analysis: Found and recommended JV partner and location.  Based analysis on market and policy research, including details such as local incentive policies, supply chain location, and availability of qualified staff

• Implementation (Corporate Diplomacy Group)
  • Government Communications – Strategy: Based on policy research and discussions with influential government players, China Concept developed a central message to convince government regulators to grant ComputerCo access to the domestic market
    • The Message: ComputerCo could offer value to the development of China’s computer industry through stable, legal operations that would compete with and soon dominate illegal imports.
  • Government Communications – Implementation: China Concept used its contacts to introduce ComputerCo to key government stakeholders at the national and local levels
    • Central Government: China Concept facilitated private negotiations with the Central government and presented ComputerCo to the highest levels of government through a widely publicized reception attended by 50 minister-level officials
    • Local Government: On the local level, China Concept handled negotiations over the JV set-up, local incentives, key operational issues, and, most importantly, the percentage of manufactured computers that could be sold domestically.

Our Results: Favorable market entry terms and market share leadership

• Favorable Market Entry Terms
  • Right to the industry’s highest level of domestic sales as a percentage of total manufactured output
  • Guarantee of management control in JV

• Market Share Leadership
  • ComputerCo quickly attained market leadership and held the number one sales position in China for five years