Is China in your plan?

The clients we serve here are increasingly working on projects in, by, or with China. On top of that, we are also part of a global company that is selling our USA-made equipment in China. As a result, we will make a dozen trips to China this year, which has to be a lot for a company our size (under 100).

Not making the extra effort (and trips) is risky, as this article from McKinsey Quarterly (registration required) says:

"By the time these companies act to overcome such barriers, it may be too late: their multinational customers, which are rapidly expanding in China, may already have created networks of local Chinese suppliers. What's more, as these suppliers hone their skills by serving demanding multinationals, they will be even better placed to compete both in China and overseas."

Anita Campbell of Small Business Trends (who posted the link to the McKinsey article) is pessimistic about the chances of the SMB working in China:

"Precious few small businesses would be in a position to chase customers in China, even by pooling resources. Most small businesses have a tough enough time increasing their footprint in their own local markets. To attempt to go after markets half way around the world, with deep cultural and language differences, is a challenge most small businesses simply cannot overcome."

She is right that it is hard to do, but bypassing China may only be cause of a slow death, as their local market is also going to be drying up and going to China (as we have seen here in West Michigan's tool-and-die industry). We've been lucky to have clients and a parent company to give us a push. But for a lot of business, small or large, to grow, China has to be a part of the strategic vision so that they can push themselves. And plan on a lot of airline miles!

Anita does point out that sourcing in China may be more important (and do-able) for the SMB. This may be an easier way to gain experience there, so that you can then look at selling back to China.