29 Sept 1999 - Hilton Hotel Shanghai
By: Gilbert Van Kerckhove
President of the Belgian-Luxembourg Business Association - Shanghai
Former Resident Director ALSTOM East China (1995-'99)
Adviser to the Belgian Minister of Foreign Trade
Shanghai Silver Magnolia Award - July 1999

Presentation made during the two-day seminar "Marketing Communications and Corporate Relations in China", organized by IBC Asia Limited (Singapore) www.ibc-asia.com

The following text is an edited version of the slides used during the presentation

OUTLINE

Infrastructure: here mostly energy and transport. Ideas applicable to other industries.
Image building: a practical four-step process.
Many questions for you to think - no magic answers.

1. Do we need an image? What is an image anyway?

• Are we selling Coke, Audi, Belgian Beer? Or a turnkey 2 x 600 MW power plant? Or water pumps for boilers? Porcelain insulators for transmission lines? Bogies for metro cars? Double-deck railway passenger cars? Are we an operator (electricity)? Engineering company?
• Is it important the "man in the street" knows about your company? (TV ads)
• What do you want people to know and think when they see your company's name?
          it comes from a "specific" country: "Made in USA" (relevant? positive image?)
          it is a powerful international group (we still don't know you here)
          the best and most famous (Christian Dior? appropriate for China?)
          number 1 in the world (what about China?)
          high quality (how do you measure?)
          high efficiency (what does it mean? maybe it is too expensive?)
          reasonable price (compared to what?)
          after sales service (do you have one in China? 24 hours availability?)
          commitment to the customer (what does it mean?)
• Will it be the main reason to get the business? What if they never heard about you? (Maybe no influence at all)

In other words.....

2. General "sales" strategy

• Before we define the image and the audience we need to know what we are going to "sell" in China. Mostly we cannot sell "everything" and "everywhere".
• We need to understand the existing and realistic needs of the market and trends for future evolution.
• When the market needs a specific product or service - what does it expect?
• What are our strong and weak points and how does it affect our position on the China market (e.g. too sophisticated for the market; need for extensive after sales service that we are not ready to set up).
• Once again we have to focus on the CHINA MARKET and not copy our approach in other markets (product type, product range, pricing levels)
• A study of reasonable depth should eliminate the "huge market" syndrome and a too much fragmented marketing & sales plan.

Examples (ALSTOM East China)

• A first Market study (95/96) for all possible products and services, identified, among others, short-term needs for frame-6 gas turbines; reasonable price, swift quotation and urgent delivery were the main factors - not image.
• The same study confirmed supercritical power plants (need for specific image to targeted audience) and upcoming metro projects (need for general image in exhibitions and swift & discreet commercial actions)
• Other Market study ('97) predicted upcoming decline of power plant projects, with only some specific projects to be expected in the medium term. Image building mostly recommended in after sales service and customer satisfaction.
• In my opinion, "image building" was mostly to be restricted to a series of very specific audiences (e.g. Electric Power Bureau, Design Institutes,...) by very specific activities (local seminars - visits to our factories and references - briefings to selected government leaders, ...).

3. Identifying your target audience and its expectations

• Now you have a better defined business plan and you decided what you should try to "sell" and to whom.
• The next step is to analyze for each "product" the eventual parties involved:
  • the customers (endusers)
  • the buyers (who will negotiate the main contract conditions)
  • the trading companies (who will sign the contract)
  • the local authorities who are part of the "political" decision making
  • the authorities in charge of "technical evaluation" (Design Institute, Ministry, Commission, ...)
  • Central Government approval entities (SDPC, MOFTEC, ...)
• Each identified party has different expectations from your company, depending on the nature of their job. Priorities need to be set in "lobbying" the parties.
• Example 1: electronic control equipment for power plants
  If your equipment is not on the Ministry's approved list you cannot join tenders; promoting your image is useless except if it helps you to be listed.
• Example 2: large thermal power plants
  Many parties are involved but even with a good image of technology, price and financing your image can be killed by a poor after sales service and technical problems that are not taken care of. The Chinese side is very sensitive to how problems are solved - often more than to the very existence of the problem. Investing in a swift and thorough emergency repair after a breakdown can build a strong image of being a "reliable partner". Failure to do so - even if you think you are "right" - can destroy your image. Massive general media campaign will not repair the damage.
• Once you have a fair idea of the different players and audiences, an overall strategy can be set up on how to reach the different groups. In particular larger companies should identify synergy among their product divisions when building an image with their audiences (and avoid duplication). China likes "big companies" with an image of strength.
• A specialized public is not interested in other products. When promoting subways to a metro company do not spend time on explaining your detailed organization chart and how great you are in power plants. They only want to know your strengths in metro cars and ... financing.
  

balance between synergy and focus is important.

4. Delivering the message to build your image

Now you know what to sell and to whom. You identified the target audiences and the message they want to receive so that your company has a "good image" that will effectively help you being successful with your business plan.

So how are you going to deliver?

Some advice

• Listen, look and learn from experts on the field.
• China is a collection of distinctive markets
• Define your approach to the market - depending on the type and size of your business and on your strategic plan:
  • through a Hong Kong agent
  • through a China-based agent
    through a serviced office center
  • through a business promotion center (e.g. Flanders, Rhône-Alpes)
  • through an own rep office and using specialized consultants and PR companies
    entirely through an own rep office with its own specialized staff
  • through a JV or WOFE
  • through a "China Limited"
• The PR department of your head office should listen (I know, often they don't!) to the input from your investigation as well as from specialized PR companies and consultants. Often the opinion of the staff "on the front-line" is ignored and the image building does not help them to get results.
• Analyze the overall cost factor of "subcontracting services", such as (experienced) PR and consulting companies versus using own staff. Depending on each individual case, it can save you money or not.
• Work closely with the service companies - you need to check they respect the strategy you have worked out on how to approach the targeted group.
• Seminars and exhibitions are often excellent tools but should be meticulously prepared and executed for optimum results. Unfortunately, money is often wasted with a poor improvement of the image you need.
• For some business an fact-finding trip abroad for targeted groups is a vital tool. Once again, do separate the groups with different focus (technical, industrial, political, financing).
• Videos and promotion material should be adapted to China. Simply translating "corporate videos" with their "universal message" often bores Chinese audiences who have totally different interests. There is no "image" if the message is ignored (just observe the attention of the audience!).
•  Large and centralized mailing lists and databases of "contacts and customers" often turn out to be a waste of money because of poor input, processing and management. It impresses of course your headquarters when you show them a computer list with all the "important people" you are sending material to build your image. As far as results are concerned....

CONCLUSION

Many questions and topics for you to think about.

Few "off-the-shelf" miracle tips.

The reason many foreign companies fail to reach their real target - to be successful & make money - is their lack of genuine effort to think and plan ahead. And the failure to learn from the experts on the field.

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