#8 Fear is not a strategy! This will pass

#8 Fear is not a strategy! This will pass

#8 Fear is not a strategy! This will pass

Guest:

Lawrence Federman

With more than 20 years of international corporate leadership experience, Lawrence Federman is passionate about helping Western companies succeed in China. He currently serves as Founder & CEO of Asiadvisers, a service that creates bespoke teams of professionals helping American businesses grow in Asia. Lawrence leads the team responsible for connecting with clients to develop market entry strategies, improve existing operations and solve complex performance problems.

Federman’s professional specialties include global expansion/launch, as well as product introduction and new market entry. He has advanced knowledge and experience with media planning and research, as well as sales, marketing and organizational development. Lawrence’s deep understanding of international markets truly sets him apart and informs his keen ability to tell a company’s story in ways that speak to partners and customers on an international scale.

Prior to launching Asiadvisers, Lawrence Federman held executive positions within various companies operating in the Asian marketplace. While working as Managing Director for Telmar, he played an instrumental role establishing an Asia Pacific office—a career-defining experience that helped shape his understanding of business operations outside of the United States. Lawrence went on to establish a wholly foreign-owned enterprise in Shanghai. And during his time with Neilsen and CSM Media research, he drove digital business development in China while forging strong relationships with international media agencies, Chinese Internet providers, TV networks and more. With every new project, he continues to build a reputation for success driving new business in other parts of the world, as well.

Lawrence Federman was born and raised in New York City. He currently resides in Brooklyn, New York and has Mainland China Permanent Residency. His Chinese fluency level is intermediate (HSK4). Lawrence holds a B.S. from Roger Williams University. When he’s not working, he enjoys traveling, photography and hiking.

The coronavirus COVID-19 is causing a lot of fear at the moment, especially as it relates to China. But fear is not a strategy, fears is never a strategy. No company can afford not to be engaged in China. Lawrence Federman tell us how to get to the other side of this humanitarian crisis and make your business thrive.

Keywords:
Episode number:
8
Duration:
20:42
Date Published:
March 12, 2020

KRISTINA PODNAR, HOST: Hello everyone. Today I am delighted to welcome Lawrence Federman to the podcast.

With more than 20 years of international corporate leadership experience, Lawrence is passionate about helping Western companies succeed in China. He currently serves as Founder & CEO of Asiadvisers, a service that creates bespoke teams of professionals helping American businesses grow in Asia.

Lawrence welcome to The Power of Digital Policy. I imagine your perspectives are in high demand these days as businesses – whether they are established in China or are toying with making the jump – hesitate for a moment with the coronavirus making the headlines. What are your thoughts on the news and the seemingly resulting panic?

LAWRENCE FEDERMAN, GUEST:  Yeah, you know it's first one says it's totally understandable, but I think first we need to remember that this is a humanitarian tragedy for those who are affected and our priority needs to focus on saving lives and doing everything we can to stop the spread of the virus. We need to remember that. We all share this world and we're all in it together with something like this.

By having said all that I think fear is not a strategy, fears never strategy and what I try to tell clients is that no business, no company can afford not to be engaged in China. And if you're not engaged in China, then your competitors probably will and then you're at a disadvantage.

So, I lived in China during the SARS outbreak in 2002 and 2003 so I have experience in this area. And I think what I try to tell clients is you really want to think about where we want to be after the Corona virus because you know, hopefully sooner rather than later, but this will pass and where do you want to be with your employees in China if you're already in China? Where do you want to be with your suppliers in China? Where are you want to be with your partners in China? And where do you want to be with your customers? And so, I think we need to think about after the virus so for example, as I said, I was in Hong Kong during SARS and I worked for a multinational American-based software company and I ran Asia-Pacific Division and I move in 1997 by myself. I built the business. I hired staff. We have several offices and region everything was going well, SARS his 2002, 2003 and we used to have every two weeks management called, all the heads of the divisions and head office. We discussed various issues that we all face and I remember telling the group that you know, at the time, you know, a lot of companies were evacuating staff and you know, what was going on the stars and other forget one of the senior Executives said, after I mention the evacuation, he said no you should stay there and I remember thinking and also nobody else said anything after, that so I remember thinking that the company was happy for me to be there and make money for them but in a crisis, they're happy for me to stay there so they can protect themselves and, all these years later, I never forgot that and that's probably why they're a former employer right now. Having said that looking back having stayed in Hong Kong during the SARS crisis it was a great learning experience. I stayed with my staff. I supported my local team, made sure that we were safe and have masks and all the things you need to do to protect yourself during a crisis like this, but I think the main thing we all need to run rules that we will get past the Corona virus. And in my opinion, it's an opportunity to strengthen our relationship with the second biggest economy in the world so that both countries can continue to prosper.

KRISTINA: Can you share a bit of your perspective on everyday life in China today? What is the latest you are hearing from your network?

LAWRENCE:  Yeah, you know having talking to contacts and colleagues in China and having gone through this in SARS, there's a number of things that companies do, of course, you can do telecommuting. Another thing that we did during SARS is we staggered the work hours so that staff could come to work when it's not so busy, not during rush hour or so. You have flexible hours. You know, of course manufacturing is an issue because you know people have to get the factory and make the products, you know that other to sell that other people are going to assume like Apple, you know, people have to go to the Foxconn factories in order to make the iPhones for an or an Apple sells a little be a I think they'll be a hit in terms of the manufacturing sector, but for the services sector, you do see telecommuting. I've also heard in China they are letting you know one person from the household go out for a few hours to buy things in the stores so it so even now, you know, you're seeing to see you starting to see more activity more people going back to work. So, I think it will get better over time. But there are strategies you can place trying to was at a standstill for a while and I think they're just starting to get back into it. So, I think we'll hopefully sooner rather than later. We'll get past it.

KRISTINA: It's interesting, Lawrence, because I think you've just demonstrated to us that over two decades of experience living in China means a lot of interesting insights and really getting to know the culture and the people and the business environment and the intricacies that come with doing business in China and I am curious, you know, just briefly, can you tell us what changes have you seen in the time that you've been living in China?

LAWRENCE:  In terms of business, and understanding consumers, is that Chinese consumer is much more savvy then they were when I first came to China market, Chinese people are traveling more, Chinese people are more educated about what's happening around the world and you're dealing with a very sophisticated consumer, you're dealing with consumer that's even like here, that's influenced by social media, that's influenced by influencers. The key opinion leaders or influencers are very important in China like they are here. So, I think the big change in terms of the consumer is you're dealing with the much savvier consumer and you're also dealing with much more local competition. You know, it used to be, company is going to try that and they wouldn't have any local competitors. For example, you know a Nike would go into China and there really weren't any big sports apparel companies in China for them to compete with, now there's LI-NING and 361 Degrees there's local competitors that have very high-quality products. So, it's not just the you're waltzing in and, everybody's going to run to purchase your products, you're going to be facing local competitors. So, it's an evolved consumer. The competitors are evolved and it's so much more dynamic environment than before but it also in a way it's a lot easier setting up companies there a lot easier, the Chinese to be fair have done a lot in terms of regulation and making it easier for foreigners to set up companies in China. So, from an operations standpoint, it's gotten a lot easier. Logistics of got a lot easier. There are new airports. There are high speed trains. There are roads. There's you know that it's easier to move around and get things done than before. So, it away it's harder in the sense that the consumers a lot smarter and competitors are a lot smarter on the ground in China. But also, it's gotten easier in terms of the regulatory environment, in terms of the rules and what you need to do to set up your business in China.

KRISTINA: What advice do you have for businesses looking to kind of jump into the Chinese market and take advantage of the current situation?

LAWRENCE: A lot of companies want to jump into China and you should, you should look into China. It's the second biggest economy on Earth and you can't ignore China or you ignore it, your competitors probably won't ignore it and then you're at a disadvantage. But you know, I always tell clients, first of all, you know, take a breath and I think the most important thing before you enter the China market is do as much research as possible to understand the market in general understand your industry in particular and understand how Chinese consumers make purchase decisions within your industry. And this is really where AI can help because it can give you the insights. You need to help craft your Market entry strategy before you go in or improve your existing China market strategy, if you're already in China, there's three key points I always tell clients before entering the China market. First of all is, copy and paste strategies from your home country will probably not working with China, second, you need to adapt to China and China's not going to adapt to you. It's a very unique market and you need to change your thinking for you go in and third, China moves very fast and most companies that I've seen that fail in China is because they fail to not move as quickly as they need to make decisions and take advantage of opportunities.

For example, you know traditionally Western companies have relied on market research surveys and social listening to understand consumers purchasing behavior. But in China, that's probably not going to give you the insights you're looking for because you probably cannot cover all the cities you need to effectively do your surveys and it's also a slow process, does not allow for changes in market sentiment or trends, so often companies are too slow to generate the insights into a rapidly changing Chinese consumer trends. So, in an ultra-dynamic, vast and fast-changing Chinese market place, it requires a sophisticated data driven management approach and working with a partner in China to help you set up your solution can help you hit the ground running or improve your existing strategies. And also, just to tie this into digital policy, really want to make sure that you got your digital policies right. Because for example, companies are not allowed to transfer data outside China or, critically sensitive data or consumer data, you're not allowed to transfer that data outside China. So, you want to make sure you have your digital policy right, have your parameters right so you don't have staff doing things that can put you at risk.

KRISTINA: So that's great because I think a lot of times people see opportunity and they don't consider the risk and I'm all about balancing those two things out. So, I'm wondering it when a business is looking to take that leap into China. It sounds like the best approach is to find a local partner. And so, what is your advice for companies that are looking to partner with somebody what did should they be looking for?

LAWRENCE: Yeah, I think that's a great question and I think for such a complex market you really need what I tell clients is you really need to look for someone that you can trust, someone who understands the China market, who understands your industry and can help you navigate the complexities of the Chinese market and also somebody who's really going to tell you the truth of what's happening on the ground and it's just going to tell you what you want to hear. You also really want to make sure that if you have a partner that you have access to the end consumer yourself because in any market, your customer is going to tell you everything you need to know to succeed as long as you're willing to listen and learn and adapt. So, having the access to the end consumers so that you can listen to them and that you can hear yourself what are the consumers saying about your product in China. And then you're able to adjust your strategy as you go.

KRISTINA: Those are some really great tips, wondering, you know, just as the business then prepares to kind of enter the market, they're looking for perhaps a partner in the marketplace as well, is there a specific sort of phased approach that you would recommend or should people leap first and then start planning? Like what should they prioritize?

LAWRENCE: Yeah. I think that's another great question. I think the first question is to know thyself. What are you looking to achieve in the China market? So, are you looking to invest and be there for the long term and build long-term brand loyalty or you just looking to get in some short-term gains and then get out so I think it's knowing what are your expectations? What are you looking to get out of the Chinese market first? So, understanding where you're at and where your company is at where you want to be in this effort and entering the China market and based on the above answer you know what resources you need to allocate to achieve those goals. So, you know who are the people in your organization who you're going to assign to those goals and why and do they have do you have the internal resources to navigate the China market or do you need to bring in a trusted advisor who can help you from the outside navigate into China?

And then it's really about just doing as much homework as you can, doing as much advanced research as we can, and see either by yourself by literally, you know going to China and doing the research yourself or by working with a trusted advisor. And so many things I always tell clients or look for is to understand the China market landscape in general, it's a big Market. There's lot of provinces, North China is very different than South China, know the landscape in general, do you know what you're getting yourself into? How does your industry operate in China? You know who are the key players in your industry, who are the influencers in your industry? Some other things to consider are who are your potential customers and who are your potential competitors? What is the regulatory environment look like, this is really important because in some Industries is heavily regulated, some industries you can't just going on your own? You must have a Chinese partner, so you to understand your industry and how is your industry regulated in China? So, they can operate effectively also what are the legal requirements in your business, you know, sit going in and setting up do legally need to have a partner. What type of business entity do you have and how you're going to navigate that and what legal support do you need? What resources do you need on the ground in China? What people do you need to execute your plans?

Another key question is how do you get your money out of China? China's currency is regulated. The currency exchange is regulated. So the first middle last question of everything that you do in China release what I tell my clients are how do you get your money on a China and you need to think about that before you go into China, because a lot of what you do is revolves around how you get your money out of China. Another important question is because you're on the ground in China, you run into trouble who will help you out. You know, who you're going to go if you run into a jam with your partner on your own, what sort of support system you have whether it's a trusted advisor or other people in your industry or, even friends that you know that you have a support system. You know, if you go in on your own you're on your own if you have a support system set up as you go in then you have other people to go through for advice and support and if you run into a jam.

And then in the end, what is your exit strategy, you know going in you have to think about getting out if it's long term. Maybe you're building a business. You want to sell it. You want to you know, how do you how do you see your exit strategy and thinking about it?

KRISTINA: You have spent nearly two decades now in China. In that time AI marketing has become a critical business competency. Can you share with listeners how Chinese consumers tend to interact with AI marketing and what expectations do they have, if any?

LAWRENCE: Yeah, you know AI in China is very different than other markets mainly for two reasons. It has a lot more depth and breadth because firstly AI is a development priority for the Chinese government through them for those a lot of support from the government. There's a lot of investment from the government. It's a high priority for them AI in general. I think half of all AI companies are in China now. So, there's a lot of government support for AI and which is needed in China for any major initiative to get that off the ground. And also another key point is is how the top three tech companies in China use Ai and those top three companies namely are Baidu, Alibaba and Tencent, collective known as BAT and they have a lot more data points to feed into their AI algorithms then you might see another country. So, for example, Alibaba is the largest e-commerce platform in China. They have Taobao and Tmall, which is similar to Amazon. They have Alibaba has Alipay which is similar to PayPal and they have the largest online video platform called Youku which is similar to Netflix. So, what Alibaba will do is they'll feed in all the data points from all these different platforms into their AI algorithms to better understand the consumer and better understand purchasing behavior in China. So, the depth and breadth of AI in China is a lot different than you might see elsewhere.

KRISTINA:  For some people who are interested in making the leap into China, maybe they want to reach out to you and get additional information or they want to ping a business idea across your desktop, what is the best way to reach you?

LAWRENCE:  Best way to reach me is to go to my website asiadvisers.com/

and connect with me there.

KRISTINA:  Great. Thank you so much with today with all of that information Lawrence for being with us and sharing generously all of your insights. I appreciate it. And I know my listeners do to.

LAWRENCE:  Pleasure to be here.

KRISTINA:  Thanks Lawrence.

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