Top Ten Reasons Chinese Companies Fail in America

Way back in 2010, I wrote Ten Reasons Chinese Companies Fail In The U.S. for Forbes Magazine.

My top ten list in that article was as follows:

1. Chinese companies focus on a Chinese consumer, not an American one.

2. Chinese companies fail to realize how one reputation-damaging mistake in the United States could doom them forever here.

3. Chinese companies fail to realize it will take time for them to make an impact in the United States and they are unwilling to spend the time and money necessary to do so.

4. Chinese companies focus too much on the end result (making money), and by doing so, they sacrifice the professionalism that would allow them to achieve long- term success.

5. Chinese companies tell users what they want instead of listening to users.

6. Chinese companies focus too much on making money in the short term, rather than on building the quality necessary to sustain themselves in the long term.

7. Chinese companies fail to understand how beauty and design might distinguish their product from that of their competitors.

8. Chinese companies rely too much on phone calls and face-to-face meetings instead of e-mail.

9. Chinese companies fail to use “simple and elegant designs.”

10. Chinese companies fail to realize their need to hire MBAs and those with local knowledge.

The other day I received an email from a reader explaining why he liked this article so much and then proceeding to list out exactly how so many of the above things apply to the Chinese company with which he works. The below is the email, doctored to avoid his company ever being able to recognize him or her.

Dear Dan:

I’ve never felt compelled to email a blogger privately but your article was SO spot on I simply had to reach out to you. Let me first introduce myself.

I am in a high level marketing related position for a Chinese company with a U.S. office. I have decades of high level marketing experience, some with Fortune 500 companies. I am proud of my experience and my contributions. This Chinese company presumably hired me because of my experience and my past accomplishments.

I took my current position to enhance the sales side of this Chinese company. In my first year at the company I quadrupled the sales of one division. Despite this I’m constantly being told that sales in this division should be considerably higher and they consistently forecast those higher sales even though we don’t have the product in our warehouses to accomplish that. The high level Chinese executives at the company simply do not understand the concept of “American end users aren’t going to wait six months for their product for the boat to come from China.” How can any CEO project such a forecast without the inventory? It makes no sense and I reiterate this to management till I’m blue in the face.

When it became clear that I was instrumental in increasing sales by leaps and bounds, it was deemed “luck” by the Chinese execs, including the CEO. My morale is, well, virtually non-existent.

All the points in your article I have fought about ad nauseum. I don’t believe I’ve ever felt so frustrated at any job. The lack of designated responsibilities and titles to employees, the built-in cultural (and bluntly hinted at) expectations of working over 40 hours a week, “Chinese style,” a not-so-subtle reference to Americans being “lazy,” and furtive “Chinese meetings” are all aspects of working for Chinese employers that leave us American workers less than motivated.

I know that my situation is hardly an isolated one. I have a European friend who got fired at his large Chinese company for trying to update the customer service policy to be more friendly to buyers (they misrepresented their products and did not grant refunds) and another who was terminated after taking a stand against a fake product they were selling  as real. There is a bizarre mindset among many in the Chinese business community here that US law is irrelevant, or just an inconvenience.

Your point about the Chinese coming here thinking the US market is like the Chinese market hit home with me. Chinese tastes are quite different from American – we like different colors of products, for example. When I continually point this out, it falls upon deaf ears. We lose our shirts rolling out a product, I utter “I told you so” under my breath, and continue to beat my head against a wall.

I’ll bring up salient points and provide marketing direction and he’ll ask me a question that makes me want to pull my hair out, strand by strand. #1 and #5 go hand-in-hand, as I’ve also brought up the “Shouldn’t we be telling China what to make, instead of China sending us product we can’t sell?” question. Recently, the CEO asked the same question, as if it were an original thought, of course.

I also agree with you on how Chinese companies tend to devalue “soft” competencies such as marketing, despite a solid marketing strategy being pivotal to business success. At one point early on with the company, I unveiled my thoughts on forming the company’s future marketing strategy. After my sales team added its contributions, the CEO appeared dismissive of the proceedings, as if a couple of know-nothing Yanks were telling him how to run his business.

Well, we were. We’re in it for the long term. We want to build a good brand with a good reputation. Most importantly, we are the ones with knowledge of the American market and presumably that is why we were hired and that is exactly what we were supposedly tasked to do.

By the way, Point #1 made me laugh out loud, because it reminded me of conversations I’ve had with the CEO.

BLOG NOTE: The below are typical conversations our China lawyers have had with Chinese clients and were what made this person laugh from Point #1:

Chinese clients have driven me batty by asking my views on things I know nothing about, and then completely ignoring my advice when I try to hook them up with real experts. The following are typical conversations:

Chinese client: How much should we pay for that U.S. trademark?

Me: I have absolutely no idea. I just do not know your industry well enough to be able to help you at all on this. But, we have worked with a company that does nothing but value IP and I would be happy to give you their name.

Chinese client: But what is your best estimate?

*     *     *     *

Chinese client: Should we start out selling our product just on the West Coast or should we start out nationally?

Me: Good question. Difficult question. It seems to me the answer to this will hinge greatly on the costs involved and on your ability to set up distribution networks. My firm does not handle questions like this (and even if we did, I do not think it would make sense for you to pay law firm rates for this information) but I would be happy to refer you to top notch business consultants who do.

Chinese client: Should we start out in Los Angeles, Chicago or New York?

What are you seeing out there? No really, what are you seeing out there in terms of Chinese companies figuring out how to make it in America? I would love to hear from what people are seeing and hearing out in the field.