(Published in the Manila Standard under the Greenlight column on November 6, 2006)
Reynaldo C. Lugtu, Jr. teaches management and marketing courses in the MBA Program of De La Salle Professional Schools. He may be e-mailed at rlugtu2002@yahoo.com or visit his blog at http://rlugtu.blogspot.com.
"Our businessmen come to Nanning looking for products as candidates for integrative trade with China,” President Arroyo said at the opening ceremonies of the 3rd China-ASEAN Expo (CAEXPO) and the 3rd China-ASEAN Business and Investment Summit (CABIS) on October 31, in Nanning, China.
She further said that Filipino businessmen participated in the expo "looking not only for products to bring home, but for industries where Chinese and ASEAN manufacturing can collaborate to produce for our own domestic markets and for the rest of the world."
This was an opportune time for Filipino businessmen and executives participants, who will be part of the strengthening of “integrative trade” within the East Asian region to reduce dependence for exports on Western markets.
Managing in an unpredictable environment
But perhaps what is more important for the Filipino participants to learn from this exhibition in particular, and from China in general is how Chinese entrepreneurs and businessmen were able manage effectively and grow their business empires within a short span of time, in a highly volatile and unpredictable environment.
Succeeding in China is tougher than usual. “Chinese companies face extremely high levels of uncertainty across multiple dimensions,” said Donald Sull in his book “Made in China: What Western Managers Can Learn from Trailblazing Chinese Entrepreneurs,” where he analyzed the success secrets of leading Chinese firms that have thrived in the country’s volatile market.
The highly volatile macro-environment in China is characterized with unpredictable regulation and industrial policy, uncertainty from integration into global markets with the onslaught of deep-pocket multinationals into China, low access to global technology markets, uncertain access to and cost of capital, macroeconomic jolts (e.g. depreciation of renminbi), and unclear and shifting intellectual property rights.
But despite these obstacles, “an elite group of Chinese companies, [with examples from Legend, now known as Lenovo with its merger with IBM PC division, to UTStarcom, an emerging global telecommunications vendor] managed not only to survive, but to thrive amidst the unpredictability that characterized China’s move to a market economy and integration into the global economy,” avers Sull.
No difference from China
The Philippine macro-environment is no different from that of China, with perhaps less volatility and unpredictability. We face the same issues but with less intensity. Notwithstanding, we hear many businessmen and entrepreneurs complain about the same set of factors – the devaluation or appreciation of the peso which affects either exporters or importers, unpredictable regulatory environment especially with every change in the administration, entry of multinational firms which compete with local companies, and intellectual property issues.
This is probably the reason why, unlike in China, we have not witnessed the growth and ascension of new Philippine firms in a regional scale in the last 15 to 20 years. The fragile and sometimes volatile environment in the Philippines has the potential to destabilize the strategic frameworks and undermine growth efforts of Philippine firms.
Chinese management skills
So what can Philippine businessmen and entrepreneurs learn from their Chinese counterparts? In Sull’s findings, the Chinese firms possess a variety of valuable management skills, including their ability to decide and act rapidly based on information and facts at hand and on the ground, rather than depending on their long-term plans.
Chinese entrepreneurs have also mastered “active waiting”, a skill that consists of anticipating and preparing for opportunities and threats that a manager can neither anticipate nor control in a highly unpredictable market. Instead of the usual “wait-and-see” attitude that we often see among local entrepreneurs when confronted with uncertainties, Chinese managers’ focus on “timing-based competition” grounded on three windows of opportunity - customers, competitors, and context (including external factors other than buyers and competition) - which consistently matter in evaluating whether the timing is right to pursue an opportunity.
This “active-waiting” approach helps them react quickly to a constantly changing environment; but this is not to assume that being fast beats the slow. A Chinese firm, Wahaha, for example, pioneered the children's nutritional drink segment. However, in some cases, Wahaha followed early players who educated consumers on the benefits of packaged milk, carbonated drinks, and bottled water.
Right opportunity
Success, therefore, depends on mustering up much of the company’s resources for the right opportunity at the right time. But deciding and acting quickly at the right time depends, to a large extent, on whether the three factors - customers, competitors, and context - are aligned. Internal factors, of course, influence a manager’s ability to act quickly; but much of timing depends on factors principally outside the control of the entrepreneur or businessman.
Perhaps more than just products or services to sell to and from China, our business leaders and entrepreneurs can learn from their Chinese counterparts on how they manage effectively in turbulent markets, in spite of the unpredictable external forces that beset them.
-----------------------------------------------------She further said that Filipino businessmen participated in the expo "looking not only for products to bring home, but for industries where Chinese and ASEAN manufacturing can collaborate to produce for our own domestic markets and for the rest of the world."
This was an opportune time for Filipino businessmen and executives participants, who will be part of the strengthening of “integrative trade” within the East Asian region to reduce dependence for exports on Western markets.
Managing in an unpredictable environment
But perhaps what is more important for the Filipino participants to learn from this exhibition in particular, and from China in general is how Chinese entrepreneurs and businessmen were able manage effectively and grow their business empires within a short span of time, in a highly volatile and unpredictable environment.
Succeeding in China is tougher than usual. “Chinese companies face extremely high levels of uncertainty across multiple dimensions,” said Donald Sull in his book “Made in China: What Western Managers Can Learn from Trailblazing Chinese Entrepreneurs,” where he analyzed the success secrets of leading Chinese firms that have thrived in the country’s volatile market.
The highly volatile macro-environment in China is characterized with unpredictable regulation and industrial policy, uncertainty from integration into global markets with the onslaught of deep-pocket multinationals into China, low access to global technology markets, uncertain access to and cost of capital, macroeconomic jolts (e.g. depreciation of renminbi), and unclear and shifting intellectual property rights.
But despite these obstacles, “an elite group of Chinese companies, [with examples from Legend, now known as Lenovo with its merger with IBM PC division, to UTStarcom, an emerging global telecommunications vendor] managed not only to survive, but to thrive amidst the unpredictability that characterized China’s move to a market economy and integration into the global economy,” avers Sull.
No difference from China
The Philippine macro-environment is no different from that of China, with perhaps less volatility and unpredictability. We face the same issues but with less intensity. Notwithstanding, we hear many businessmen and entrepreneurs complain about the same set of factors – the devaluation or appreciation of the peso which affects either exporters or importers, unpredictable regulatory environment especially with every change in the administration, entry of multinational firms which compete with local companies, and intellectual property issues.
This is probably the reason why, unlike in China, we have not witnessed the growth and ascension of new Philippine firms in a regional scale in the last 15 to 20 years. The fragile and sometimes volatile environment in the Philippines has the potential to destabilize the strategic frameworks and undermine growth efforts of Philippine firms.
Chinese management skills
So what can Philippine businessmen and entrepreneurs learn from their Chinese counterparts? In Sull’s findings, the Chinese firms possess a variety of valuable management skills, including their ability to decide and act rapidly based on information and facts at hand and on the ground, rather than depending on their long-term plans.
Chinese entrepreneurs have also mastered “active waiting”, a skill that consists of anticipating and preparing for opportunities and threats that a manager can neither anticipate nor control in a highly unpredictable market. Instead of the usual “wait-and-see” attitude that we often see among local entrepreneurs when confronted with uncertainties, Chinese managers’ focus on “timing-based competition” grounded on three windows of opportunity - customers, competitors, and context (including external factors other than buyers and competition) - which consistently matter in evaluating whether the timing is right to pursue an opportunity.
This “active-waiting” approach helps them react quickly to a constantly changing environment; but this is not to assume that being fast beats the slow. A Chinese firm, Wahaha, for example, pioneered the children's nutritional drink segment. However, in some cases, Wahaha followed early players who educated consumers on the benefits of packaged milk, carbonated drinks, and bottled water.
Right opportunity
Success, therefore, depends on mustering up much of the company’s resources for the right opportunity at the right time. But deciding and acting quickly at the right time depends, to a large extent, on whether the three factors - customers, competitors, and context - are aligned. Internal factors, of course, influence a manager’s ability to act quickly; but much of timing depends on factors principally outside the control of the entrepreneur or businessman.
Perhaps more than just products or services to sell to and from China, our business leaders and entrepreneurs can learn from their Chinese counterparts on how they manage effectively in turbulent markets, in spite of the unpredictable external forces that beset them.
Reynaldo C. Lugtu, Jr. teaches management and marketing courses in the MBA Program of De La Salle Professional Schools. He may be e-mailed at rlugtu2002@yahoo.com or visit his blog at http://rlugtu.blogspot.com.
Comments