Headlines are Not All True: American High-tech Success in China is Real
What happens when a company is faced with two equally important challenges at once? American high-tech giants—Uber, Amazon, Facebook—are in the midst of this exact scenario. Each of these companies is the epitome of innovation and global success. Yet, they have been challenged to do business in China due to their traditional business models, so true global success is just out of reach. Watching all of these business case studies and stories unfold in the media, one thing is certain: China has become the epicenter of thinking differently. It is where innovation meets the need for transformative business models.
That’s right, being innovative in China isn’t enough. Thinking differently about business is a parallel requirement. Innovation and business competition are fierce. Another way to think about it: What if Uber had partnered with Didi earlier? Uber’s entrée into China is a case study worth understanding by all American high tech companies. They started out with what seemed to be an interesting, out-of-the-box strategic approach to succeeding in China but in the end it didn’t quite go as planned.
Doing business in China is integral to a global company’s success. Due to China’s sheer size and population, it is well positioned to drive real change domestically and around the world. Andy Mok, managing director at Red Pagoda Resources in Beijing said it best: “What a lot of western policy makers and institutional investors have not recognized…they’ve been focused on how the outside world is going to change China. What many people have missed is actually how China is going to change the world.”
Mok has a point. Being in high-tech, we are used to driving change with invention and innovation. Consumers and enterprises adopt what we create all over the world. The higher and faster the adoption rate the greater and faster the change. Then there’s China. China’s ability to change the world on its own can’t be ignored. I can see where that unspoken difference of opinion could deter American high-tech success.
High Tech Success Stories Do Exist
I have three different high-tech stories of my own to tell about doing business in China. And I’m thrilled to report, these are success stories.
When we set out to expand our networking business in China earlier this year, we recognized early that our two challenges were: 1. Software Defined Networking (SDN) is very innovative, and 2. Our traditional business model might not be the right model for us to succeed in China. We also looked at our competitors to see if they were succeeding in China. If so, how were they doing it? If not, what were they doing wrong?
Lessons Learned Along the Way
A common theme that began to emerge was: don’t go it alone. Not only does an American company need a local presence in China but also local partners in the same industry that have similar goals who are willing to share the rewards, as well as the risks. A big part of doing business in China is respect: respect for tradition, culture and the Chinese ways of doing business. Recognizing the need to develop business partnerships is a sign of respect. Respect that Chinese companies know their market best; know best how to succeed. Uber figured that out … eventually.
To even begin thinking about partnering, we knew we would have to truly localize—which was a first for us in our networking business. But we saw the investment of time, dollars and human resources as part of our commitment to doing business in China.
When we began identifying prospective partners, we made the decision early on to focus on the best. Do it right the first time was the guiding principle. We wanted to partner with companies that are known brands in China, that had established and growing market share. Avaya is a recognized global leader in its own right. We had a leg to stand on and were confident that our credibility, longevity, commitment to innovation and leadership status would be valued.
We narrowed in on a prospective networking partner very quickly. We didn’t waste any time connecting with them. We knew by looking at all this partner was accomplishing, like Avaya, they had the same drive to move forward quickly. Given how fast networking was and is changing in other parts of the world with the advent of SDN and the shift away from hardware centricity, we immediately recognized our same enthusiasm in the eyes of our new partner.
When we explored more closely all the interests both companies have in common in doing business in various vertical markets in China, we learned that the opportunities with this partner were more than we initially thought. The growth potential was and remains exciting. But we also knew our role would be only to provide Avaya’s standard high-quality, proven, scalable solution that our partner could confidently brand as their own and sell to their customers. This is a new business model for Avaya. To do business in China, to be included in the wave of success that is happening, we had to transform our business model. We had to transform our thinking or risk being left behind.
Fast, Real Results
We had a large team working on this project, including local Avaya employees who live and work in China. The time it took to go from prospective partner to Avaya partner, was less than six months.
Speaking of moving fast, within the first full quarter of partnering with us—approximately the first 90 days of the partnership—the partner closed the biggest networking deal for Avaya that quarter. That’s the power of doing business in China.
Wait, There’s More …
For our customer engagement enterprise business, again we chose to partner with one of the large Internet companies in China whose major business is around social and connections. Tencent QQ has more than 800 million monthly active users in China on its QQ instant messaging product. Rather than blog about what we are doing with Tencent, I’ll defer to this video that Touch Xan, the General Manager of Tencent’s Instant Messager Department, recorded while attending Avaya’s 2016 Greater China User Forum & Partner Conference last month.
Another success story is with Tuhu.com, a Chinese business-to-consumer automotive maintenance e-commerce service platform. Tuhu chose to deploy Avaya customer engagement products and connect their two customer service centers located in Shanghai and Wuhu of Anhui Province. Avaya Professional Services is providing consulting, implementation, operation and maintenance services throughout. Tuhu plans to add more application modules to the current customer service platform in the future, and build up an omni-channel customer engagement center. In addition to Avaya Professional Services, Tuhu deployed a customer engagement platform from Avaya including routing, workforce management, recording and self-service, as well as Avaya Aura and virtualization products.
Despite the Headlines…
High-tech success stories are happening between American high-tech companies and Chinese high-tech companies. It takes a different approach to doing business and the ability to transform existing business models, being open to partnering and the ability to work fast—none of which is ever easy. But we are in high tech. We live not only for change but to change the world for the better.