Case Study - US Manufacturer in China
medium-sized US-based provider of materials and related
services entered China, where it had essentially no market presence,
world-scale plant investment. The
company believed that having excellent products and services and a huge
market in China (as defined by the target industry size) failure was
impossible. However the company
a difficult environment as the market was already being served by
products at a price point around 1/5 that of its own products.
In addition, Chinese customers were not at
all receptive to the “outsourcing” model successfully used by the
North America, in which the materials, equipment to apply them and
consumed in a package deal. The Chinese
preferred to purchase materials, equipment and services separately,
down the price of each by forcing competition among multiple suppliers. Only one year after startup, having failed to
adapt its offering, the company had only secured one stable customer
“package” offer and was forced to write down over half its investment
staff. Where did they go wrong?
President directed this company in various areas
including revising its business model, developing new products in line
market needs and seeking new partnerships, helping it to turn around a
loss to near-breakeven in one year.