27th June 2011:

Cross border expansion

Regular readers of this blog will be aware of my ongoing interest in China – and the success that BDO has enjoyed in that country where we now have over 6,000 people.  I was thus very interested in a recent article in Harvard Business Review entitled ‘What the West Doesn’t Get About China’, by George Stalk and David Michael, both senior staff members at Boston Consulting Group, a management consultancy.  The article offered data and insightful commentary on the country’s acceleration towards a consumer-driven economy and the need to understand the special challenges of doing business in China.

The article referred to the need for organizations to invest in both capital and human resource to cope with ‘extraordinary growth in demand’.  However, the article only alludes to the significance of staffing.  In my view this understates the importance of people as demonstrated by the BDO Ambition Survey: Global Ambition which found that identifying the right people on the ground is of paramount importance and the single biggest factor for successful expansion into China.

Stalk and Michael advised companies looking to capitalise on expansion opportunities in China to be equipped to do business in hundreds of locations, rather than a handful of large cities.  They also recognised the huge impact equipping businesses for such an operational shift would have on organisational structure, distribution infrastructure and choice of business partners, as well as capital.  This mirrors another finding from the BDO Ambition Survey: Global Ambition, which emphasised how imperative it is to establish local suppliers and efficient distribution networks when expanding into China.

Business leaders are right to think of China when expanding internationally, due to its economic growth rate, increasing consumer demand and expanding market size.  However, it is becoming clear that understanding the local market from an operational perspective to ensure recruitment of talented staff and robust distribution networks are key to successful cross border expansion into China.  This is reflected in BDO’s experience in China.

 Global Accounting  International BDO  International Business  1 Comments June 27th, 2011