CJNg _ 2.jpgHi!


    My name is c.j., and here's the June 2008 issue of Psyche-Selling TM eNewsletter.      


    I was conducting a workshop for some members of the Hong Kong Management Association on how they can create greater sales successes for the mainland China's operations.  The workshop went on well, and everybody was generally happy.  There was however one piece of feedback that told me I could have done a better job though.  While the session was peppered with lots of examples on mainland China's business realities, there was no structured "do's and don'ts" presented during the workshop.


    So, besides putting those points into my next workshop, I thought I might as well share this with more people.  This month's topics are:

  1. Do's & Don'ts of Achieving Business Success in China (or How NOT to be the Next eBay China); and

  2. What We can Learn from the Wenchuan Quake Survivors

    This issue's main article is on  "Do's & Don'ts of Achieving Business Success in China (or How NOT to be the Next eBay China)", and it gives you the lessons how a US$180 million investment evaporated in just 5 short years.  In case you don't have that much cash to burn, here are some lessons to be learnt when you grow your business in China.


    In brief:

  • How eBay invested US$180 million to capture 80% of China's ecommerce market in 2002, only to see that shrunk to 36% by 2005;

  • Many international companies fall into the trap of "cultural bigotry and arrogance" when entering China, while many other international companies commit "management by abdication" by allowing their local staff to run wild with their resources;

  • Both ways are keys to failures in China, and international companies need to be actively involved while being sensitive to local business conditions.

    To read the rest of this newsletter, pls. click here (http://www.psycheselling.com/page4.html).

Do's & Don'ts of Achieving Business Success in China (or How NOT to be the Next eBay China)


by c.j. Ng

     In 2002, eBay Inc. injected US$180 million to purchase 100% ownership of Eachnet, then the leading eCommerce platform in China, capturing some 80% of the market.

     Within 3 years however, this leading market share had shrunken to just 36%, no thanks to an upstart, Taobao.com, which had entered the market in 2002.

     While some observers will be quick to point out that Taobao.com used some "below the belt" tactics, eBay on its part failed to make the following observations:

  • Unlike elsewhere, eBay (or Eachnet before that) was utilised not so much as a Consumer-to-Consumer (C2C) platform where individuals auction off their used items. Rather, eBay is a Business-to-Consumer) B2C platform where small businesses make their living selling low-priced products to consumers. As such, both sellers and buyers prefer to deal with fixed prices, rather than auctioning;

  • Due to banking controls in China, most buyers prefer to pay upon receipt of products, rather than making online payments.  This in turn reduces eBay's and its payment gateway subsidiary, Paypal's, operating income;

  • While eBay charges standardised fees for sellers globally, it is unwilling to waive such fees to Chinese sellers, as it believes "free is not a business model".  However, eBay's competitor Taobao.com is using its "no-fee" policy to demonstrate to sellers that it sincerely wants these users to make money first before charging for the service.

     The end result: eBay had to "wrap-up" its China operations by "selling" its stake in Eachnet to Tom.com, an online and wireless service provider owned by Hutchison Whampoa.  eBay had to fork out another US$40 million to get a 49% stake in the new Eachnet.com

     Tom.com is not faring any better either.  It has since been "privatised" (a nicer word for "delisted") from the Hong Kong Exchange in August 2007, with its share buy-back price at HK$ 1.52 per share.  This is lower than its 2000 IPO price of HK$ 1.78.

     eBay recently has revived ebay.com.cn , in addition to eachnet.com , with the former focusing a lot more on helping sellers sell to international markets.  The thing is, many eBay sellers already had registered international eBay IDs from as early as as 2005 to service international customers.  Not only was the support from eBay lacking then, it even shut down some of these sites when these sellers were found to have multiple IDs.  While leveraging its global network is a great business initiative, eBay has since alienated its sellers (and buyers too), and it's a case of "too little, too late" now.

     Interestingly, when Bo Shao, founder of the original Eachnet (the one that captured 80% market share in the first place) offered to make a return to take over the reins in 2006, his offer was turned down, citing resistance from "internal politics".  No, Bo Shao isn't going to be China's Steve Jobs, thanks to eBay's intervention.

Make No Assumptions

     Many companies come to China with high hopes of capturing a slice of China's enormous market opportunities.  Some have accurately identified some of China's flawed business practices, and seek to straighten out things in China.

     Unfortunately, transplanting what works at home isn't the right solution either.  Cultural issues aside, as a developing economy that just opened up to the rest of the world 30 years ago, there are many business practices that are just different, if not strange, compared to markets in developed economies.  Here are some examples:

  • A Fortune-500 3rd-Party Logistics (3PL) provider would like to standardise operations for all its China subsidiaries, but to no avail.  The subsidiaries report to no one except to "guarantee" the parent company a certain amount of profits each year.  Any perceived over-intervention will just make them defect and ally with other 3PL providers.

  • Insurers from Hong Kong and Taiwan are finding that unlike its financial planners back home, their mainland Chinese financial planners are more concerned about making "a fast buck", rather than working hard at understanding customers' needs.

  • McDonald's, the world's market leader in fast-food is a distant second compared to KFC, simply because the Chinese customer perceive that for the same price, a fried chicken drumstick has a higher intrinsic value compared to a piece of minced beef sandwiched between two pieces of bread;

  • Singapore-owned retailers tend to have poor service for their China outlets even though their service standards back home was great.  The reason being they have largely been pampered with skilled staff back home, and are unaccustomed to getting unskilled staff delivering the same levels of service;

  • Finally, the Singapore government thought it had the entire deal sealed when it got Beijing's support to build the Suzhou-Singapore Industrial Park (SSIP).  Unfortunately, without local government support, it literally got hell in its first 10 years of inception. 

     At this juncture, I understand that many readers would like to have a list of what's in China that is different from what's available back home.  Unfortunately, this will be a never-ending list if compiled.  Hence, the general advice of just "Make No Assumptions".  Corporate bigotry and arrogance have got no place here.

      In fact, come companies enter China via means of acquiring local companies
.  While the due diligence work conducted centres around the financial aspects of the local business, future due diligence work may have to take consideration of:

  • Business practices (esp. if there are any expiring monopolistic licenses, or if kick-backs is a common practice)

  • Corporate culture (esp. if managers are incentivised to grow the business or just "follow the rules")

  • Social norms (esp. since China's average staff turnover is just 18 months, and depending on where you hire, employees may have social norms that are quite different from those you are familiar with.  Even customers behave differently here too.)

Be Actively Involved

     Some international companies, knowing that China is rather different from what they experienced, chose to appoint Chinese General Managers, and delegate them full responsibilities of running their China business.

     The mistake here isn't about appointing Chinese General Managers or CEOs.  The mistake that many of such companies make is "management by abdication", meaning they are literally hands-off.

     It would be unfair (not to mention gross bigotry) to assume that Chinese managers are dishonest, and that they will steal from the company.  It is just as unfair to assume Chinese managers
are incompetent in doing their jobs.

     It is, however, in the entrant's interest to learn as much about doing business in China in the shortest time possible.  Unfortunately, no amount of Executive Development Programmes can adequately prepare
international companies to learn how they can succeed in China.  International companies would have to be actively involved in the day-to-day operations of their Chinese business, and NOT manage from an ivory tower (desk) back home.

Some areas to be actively involved include:

  • Following your sales people to visit customers and get a real feel on what are some of the sales and customer issues that your Chinese subsidiaries are facing;

  • Following your production people around and find out what goes on in production, procurement and supply chain management.  If you merely source from Chinese factories or wholesalers, visit them and strengthen the relationship;

  • Getting to know your key Chinese staff on a personal level, not to poke at their private matters, but again to strengthen their relationship with you and your company.

     While it is important to assume nothing when in China, it is just as important to be assertive when the need arises.  Many Chinese managers love to use the phrase "But this is China, and this is how we do things here." 

     Those who use the same sentence repeatedly are at best unwilling to change for the better, and at worst be using that as an excuse for something more sinister.

     When confronted with the "But this is China" tagline, it is important not to just jump in to your assumptions, but rather use some simple questioning such as:

  • "Can you enlighten me, why is it so in China?";

  • "What if we try something different?  Are there any companies that tried something different and succeeded?"

  • "Can we just try a different approach in this case just to test the reaction?"

     Even when you are unsure what is the best course of action for your China operations, you can remain silent but be keen in your observations.  At worst, you will know what will be the right steps to take should things don't work out as expected.

Be Continuously Improving

     Success is a journey and not a destination, so they say
.  The same applies to achieving business success in China, although it's going to be a much bumpier ride.

     In the case of the Singapore government's venture in China, they have since learnt their lessons well, and are making tons of profits, especially through its property subsidiary, Capitaland.  Unfortunately for eBay, due to its unwillingness to face its own mistakes, and has since lost most of its chances on capitalising on one of the world's fastest growing eCommerce market.

     It is unlikely that any international company can get it right upon landing in China.  The key is simply be observant, and learn from early mistakes quick.

After all, not many companies can afford to burn US$180 million, then just shrug and say, "We see it as an evolution in China."  Not many senior executives can survive that either.

Directions Management Consulting will be providing advice and support to international companies who are looking to achieving business success in China.

For more information, please e-mail info@directions-consulting.com or call +86-136 7190 2505 or Skype: cydj001 and arrange to buy me a mocha.  All information shall be kept in confidence.

Power Breakfast Hour: 15 July 2008

Why eBay Lost US$180 Million in China, and What You can do to Avoid the Same Fate


     Join China Business Performance Coach c.j. Ng in this one-hour breakfast meeting where he will be sharing with you the following insights:

  • How NOT to be like eBay in China;

  • How to be actively involved in your China operations while still making no assumptions on what should or shouldn't be done; and

  • How to learn from past mistakes quickly

VENUE: Le Equilles Restaurant, Ground Floor, Xin Jin Qiao Plaza, 23 Beijing West Road (by Xizang Middle Road), Shanghai.  Pls. enter via Citadines Apart'Hotel at 55 Beijing West Road.

DATE: Tuesday, 15 July 2008


TIME: from 08:00 a.m. - 09:00 a.m.

PRICE: Just Pay for your Own Breakfast (Est. RMB 50-100)

     To make this a more conducive discussion, we are expecting a small group of about 15 people only. The previous Power Breakfast Hour session was a sold-out and over-booked event within a week of notice. Please e-mail your registrations to sales@directions-consulting.com



Tribute to Wenchuan Quake Survivors:
What We can Learn from the Wenchuan Quake Survivors

by c.j. Ng

On 12 May 2008, an earthquake measuring a massive 8.0 on the Richter Scale, swept through Southwest China, killing about 80,000 people and made between 5-15 million people homeless without any sources of income.

Throughout the ordeal, Chinese and international rescue teams have been arriving in droves, despite the difficult terrain and bad whether.  Aid from all sources have also arrived very quickly, saving countless lives.  Fundraising campaigns to help survivors rebuild their lives continue even after more than a month from the disaster.

In terms of the rescue and aid missions, I believe this is a triumph of humanity, and that our world has gotten its act together to save lives, rather than to destroy them.  Bravo to those whom have helped to organise and execute the rescue and aid missions

However, the heroes of these articles are not the rescue or aid heroes.  They are the very survivors of the earthquake.

Notice I have used the word "survivors", and not "victims"

Victims refer to those that are "acted upon and adversely affected by a force or agent."

Survivors, on the other hand, refer to those who "carry on despite hardships or trauma"

Despite being scarred by the earthquake, and facing tremendous difficulties to rebuild their lives, most of the quake survivors did not draw attention to their plight.


Many of them lost their homes, their farms, their factories or any other sources of income.  Some lost their entire families: their parents, spouse and children.  Some are even triple amputees, losing both legs and an arm.

Instead, they remained positive and demonstrated the resilience that they will emerge the eventual victor in this calamity.  There are many selfless acts in this disaster, including:

  1. The dead mom who saved her infant's life by putting her nipple in the infant's mouth, and using her body as a shield for collapsing debris;

  2. The school teacher who kept vigil for more than 30 hours by her students before they were all rescued, only to find her daughter (also a student in the same school) dead in another part of the collapsed school.  The school teacher knew where her daughter was, but chose to stay close to her students and gave more than just moral support;

  3. The survivor who insisted that she be amputated so that rescuers can have more time rescuing others

If only we could learn just a little from those who gave their lives, and those who demonstrated the steely resolve to survive against all odds and remain optimistic.

Many businesses have been adversely affected by rising oil and raw material prices.  Unlike the Wenchuan quake survivors, many of these business owners and managers prefer to whine about it.

The price per barrel of oil may reach US$200 in a year's time.  At best, it will NOT fall below US$100.  The sub-prime crisis in the US didn't help matters too.  Yes, the future is bleak, and it starts tonight.

What business managers and owners have to do now is to take the necessary action to adapt to the world of expensive oil and raw materials, not simply whine about.

At US$200 a barrel, it is indeed tough for many businesses to survive.

However, compared to what the Quake survivors are facing, this is a "walk in the park".

Furthermore, businesses still have time to prepare themselves.

Just like the earthquake, rising oil and raw material prices is a reality.  The only thing we can do is to face it squarely, and deal with it.

If only the resilience, optimism and resourcefulness of the Quake survivors can rub off onto the business community.  Immediately after the earthquake, survivors band together to create temporary shelters, set up camp fires to keep warm and gathered all remaining food supplies, BEFORE any rescuers or aid could reach them.

Perhaps the story that most personify the optimism and the will to live is none other than the "Coke Boy".  Rescued after 80 hours, the first words 17 year-old Xue Xiao said was "Can I have some cola?  Chilled one, please."  No he didn't mention Coke or Coca-cola in "live" television.  Xue Xiao later had to have his right arm and leg amputated, and those first words are likely to express him being glad to enjoy his favourite cola again.

Send your ideas on how else we can learn from the Wenchuan Quake survivors to info@psycheselling.com .  We certainly need more positive ideas in bad times, don't we? 

About PsycheSelling.com

Psyche-Selling TM is a wholly-owned brand of Directions Management Consulting Pte Ltd that specialises in the field of improving sales performance by enhancing the performance of the entire sales team.  Apart from the regular "selling skills training", Psyche-Selling TM conducts pre- and post-training analysis, interviews, monitoring and reviews, working closely with managers and even senior management, to deliver real improvements in sales leadership and performance.   

Directions Management Consulting Pte Ltd is a Human Capital Integrator that helps companies to improve business performances through people.

Psyche-Selling TM is currently a co-affiliate of the  HR Chally Group, together with  Shi Bisset & Associates, to help you identify gaps in your current sales force, and then formulate ways to help you get better results.

The HR Chally Group is a talent management, leadership development, and sales improvement corporation providing personnel assessment and research services for over 33 years.  Chally is recognised as an international technology leader in scientific assessment and prediction for selection, job alignment and leadership development, and for management assessment.  For more information about implementing Total Quality Sales Management in your company, pls. log on to http://www.psycheselling.com/TQSM-ExecBrief_email.pdf to get more insights.

Enquiries and suggestions, pls. e-mail info@psycheselling.com or visit www.psycheselling.com