Made in china secrets of chinas dynamic entrepreneurs

Made in China S E C R E TS O F C H INA ’S DYNA M IC EN TR EPR ENEU R S Made in China S E C R E TS O F C H INA ’S DYNA M IC EN TR EPR ENEU R S Winter Nie & Katherine Xin with Lily Zhang John Wiley & Sons (Asia) Pte Ltd Copyright © 2009 John Wiley & Sons (Asia) Pte Ltd Published in 2009 by John Wiley & Sons (Asia) Pte Ltd Clementi Loop, #02-01, Singapore 129809 All rights reserved No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning or otherwise, except as expressly permitted by law, without either the prior written permission of the Publisher, or authorization through payment of the appropriate photocopy fee to the Copyright Clearance Center Requests for permission should be addressed to the Publisher, John Wiley & Sons (Asia) Pte Ltd., Clementi Loop, #02-01, Singapore 129809, tel: 65-64632400, fax: 65-64646912, e-mail: enquiry@wiley.com.sg This publication is designed to provide accurate and authoritative information in regard to the subject matter covered It is sold with the understanding that the Publisher is not engaged in rendering professional services If professional advice or other expert assistance is required, the services of a competent professional person should be sought Other Wiley Editorial Offices John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, USA John Wiley & Sons, Ltd., The Atrium, Southern Gate, Chichester, West Sussex P019 8SQ, UK John Wiley & Sons (Canada), Ltd., 5353 Dundas Street West, Suite 400, Toronto, Ontario M9B 6H8, Canada John Wiley & Sons Australia Ltd., 42 McDougall Street, Milton, Queensland 4064, Australia Wiley-VCH, Boschstrasse 12, D-69469 Weinheim, Germany Library of Congress Cataloging-in-Publication Data ISBN : 978-0470-82436-8 Typeset in 11/13 point, New Baskerville by Macmillan Printed in Singapore by Saik Wah Press Pte Ltd 10 To: Aspen and Jim From Winter To: My Parents From Katherine To: Yueyan and Weihna From Lily Contents Part I The Competition between MNCs and Local POEs in the China Market Chapter 1: Wahaha: Danone’s Dream Partner and Nightmare Chapter 3: Market Segment: The Success of a School-Run Factory Purified Water: The Way to Brand Expansion Future Cola: Sharing the China Market with Pepsi and Coke A Decade of Collaboration with Danone Was in Trouble Chapter 2: Nice: P&G’s Fierce Local Competitor 10 17 Product Differentiation: The Rising of a Workshop Factory 17 Winner of the Laundry Detergent Market over P&G and Unilever 19 Move up into the High-End Market 22 Taobao: The eBay Killer Taobao: Alibaba’s Defense 27 28 Differentiation from the Competitor 29 Unique Corporate Culture 31 The Advertisement War 32 Huge Market Potential Brought by Big Market Share 34 eBay China or China Piece of a Global eBay vii 36 viii Made in China Chapter 4: Who Are They? 39 Chinese POEs: MNC’s Main Competitors in the China Market 39 Small- and Medium-Sized POEs: Your Potential Rivals 39 Research Methodology 47 The Role of POEs in China’s Economy 48 Part II The Evolvement of Entrepreneurship in China 55 Chapter 5: Chapter 6: The Development of Chinese Commerce A Brief Historical Background 57 The Period of Reform and Opening-up 81 Three Stories Chapter 8: 87 The Story of Michael Ma 87 The Story of Liu Qiongying 93 The Story of Hou Zhengyu 99 Part III Understanding Entrepreneurs in Today’s China Chapter 7: 57 Who Are the Typical Entrepreneurs? 109 111 Entrepreneurs of Grassroots Background 112 Experts Turned Entrepreneurs 116 Officials Turned Entrepreneurs 120 Professional Managers Turned Entrepreneurs 121 Business Model 125 Startup Capital 125 Business Model 130 Business Models with Chinese Characteristics 135 American Models Do Not Work 137 Transformation 138 Contents Building Organizational Capability 146 Corporate Governance 154 Bottlenecks 163 Part IV Threats and Opportunities for MNCs: Competition and Cooperation with Chinese Entrepreneurs Chapter 9: ix Individual Characteristics for Their Success Characteristics for Success Chapter 10: Compete with Them 169 171 171 183 Strengths of Chinese Startup POEs 184 Weaknesses of Chinese Startup POEs 188 Chapter 11: Collaborate with Them 191 Possible Collaborative Opportunities with Chinese POEs 191 Potential Caveats of Cooperating with Chinese POEs 196 Appendix A: Interview Questions 199 Appendix B: List of Companies 201 Bibliography 205 Index 207 I P A R T THE COMPETITION BETWEEN MNCs AND LOCAL POEs IN THE CHINA MARKET Made in China: Secrets Of China’s Dynamic Entrepreneurs By Winter Nie, Katherine Xin and Lily Zhang Copyright © 2009 John Wiley & Sons (Asia) Pte Ltd C H A P T E R Wahaha D A NO NE ’ S D RE AM PARTNER A ND NI GHTM ARE I n May 2007, Groupe Danone of France lodged a lawsuit with the Arbitration Institute of the Stockholm Chamber of Commerce, accusing Wahaha Group and three of its subsidiaries of violating the “terms of non-competition” in their joint venture deal by using the “Wahaha” brand without the approval of the joint venture The accused three subsidiaries of Wahaha are non–joint ventures with Danone Since the dispute became public, the two parties have lodged a series of lawsuits So far, as of early 2008, Wahaha has chalked up wins on legal points in China, particularly the company’s hometown of Hangzhou, while Danone has claimed initial progress in legal actions outside the country But neither side sees the dispute as winnable in a courtroom, and each has urged government officials to get involved The fight has cut Danone’s beverage business in half and is costing the company US$25 million a month in sales And Wahaha lost leadership of the bottled-water market in China, according to Lei Yang, an ABN Amro analyst in Shanghai In June, Tingyi, a brand from Taiwan, took the lead with a 20% share over Wahaha’s 15%, Lei said, citing AC Nielsen data.1 The partnership seemed a good fi t initially and was hailed as a model marriage Danone brought the resources of an experienced multinational—including capital and product research—which combined well with Zong Qinghou’s local knowledge So what happened 196 Made in China among its target customer group, and has become a long-term partner with big foreign companies such as Samsung and Ricoh Investment or Acquisition As mentioned earlier, obtaining fi nancing has been a major diffi culty for most private Chinese enterprises It has even become a factor preventing them from further development Because further diffi culties lie ahead, some companies may be willing to accept foreign investment or be acquired by bigger companies Original Enterprise is one such example It set up a joint venture with Italian-based Padanaplast, but there have been some conflicts in terms of strategy, and pressure is coming from both upstream customers and downstream suppliers, causing Hou Hailiang to rethink the joint venture: “In the past, when I couldn’t reach consensus with partners I would try my best to repurchase his shares and carry out things my way Now, so long as it is conducive to the healthy development of the company and the continuous growth of our business, I can temporarily make concessions.” Lu Wenlong of Hangzhou Hightex is planning a new business model that consists of opening a shopping center for household products The center will feature dozens of showrooms featuring different rooms of a home, such as living rooms, bedrooms, and kitchens Customers can get ideas on how to use and display products on sale, much like how IKEA operates But unlike other similar outlets, this will feature the work of top designers, which will greatly add to the quality and interest levels In addition, the center will combine different categories and group them with different lines of products Lu says that if he does not have sufficient funds to implement this business model, he would like to introduce it to investors or partners Potential Caveats of Cooperating with Chinese POEs Potential threats of cooperating with Chinese POEs include: • Are they in an attractive industry? • Are they willing to accept any form of partnership? Collaborate with Them 197 Are They in an Attractive Industry? At the very beginning of Competitive Advantage, Michael Porter wrote: “Two central questions underlie the choice of competitive strategy The fi rst is the attractiveness of industries for longterm profi tability and the factors that determine it.” From this, we can see the importance of industry attractiveness to enterprise profitability Many Chinese POEs that have started from scratch are in industries with very low entrance barriers This exposes them to the threat of new entrants In the face of increasingly fierce competition, many industry players adopted a low-cost strategy An example of this is the express delivery industry To secure more market share, many competitors charged only RMB for their express delivery service within Jiangsu, Zhejiang, and Shanghai In such a cutthroat environment, express delivery companies had to reduce labor costs or adopt franchising operations (To minimize cost, the franchiser neither provided any training to nor had any involvement in the management of the franchisees The only connection between them was profit sharing.) This resulted in a general low quality of employees engaged in this business There were frequent losses of goods, and late delivery was even more prevalent Within an express delivery company, it was not uncommon for front line employees or managers to disappear with company assets and customers’ payments In some industries, suppliers have very strong bargaining power and are able to squeeze the profits of enterprises Original Enterprise was in such an industry Its business lines were the production and sale of cable materials The price of its main raw materials—copper and petrol-chemical products—rose sharply in recent years And it is very difficult for Original Enterprise to transfer the increased cost to its downstream customers So its profi ts have continued shrinking for the past few years Hou Hailiang had to give up the concept of absolute control over the enterprise’s future development Now he is willing to accept an acquisition deal In some other industries, buyers have very strong bargaining power The guanxi with buyers is a major means of securing more market share An example of this is the telecommunications engineering industry in which Zhicheng Communication operates The General Manager of Zhicheng, Cui Lijian, started without any industry background To build up guanxi, he spent much effort to 198 Made in China become friends with influential people in the industry His unique way of building up and maintaining guanxi lowered the economic cost In addition, guanxi built up this way is usually more stable than those bought by money Are They Willing to Accept Any Form of Partnership? Instinctively, Chinese private entrepreneurs not like the idea of joint venture or any partnership that may limit their decisionmaking However, with the growth of their enterprises, they have come to realize the limitations of their resources And for the sake of growth, a number of entrepreneurs have begun to accept joint ventures or alliances, but many of them still hope to retain control of the enterprise As we mentioned under the “collaborative opportunities” heading, Bridge HR is a very promising candidate for collaboration However, the general manager has a strong sense of control over the company Hou Zhengyu says he must retain a controlling share either in introducing investors or in forming a joint venture “Even in our contacts with venture capital investors, we insist on holding at least 80% of the enterprise shares.” Opple is also a good candidate for foreign investors, but Opple’s General Manager, Wang Yaohai, is cautious about the introduction of external capital He says: “Capital is a really good thing when you need it But once it is introduced into the company, you also have to handle some difficult situations.” He is even cautious on the issue of going public: “Before going public, you need to figure out the purpose for doing so So far, I haven’t figured it out yet ” Several years ago when there were not so many joint ventures or public companies in China, there might have been many Chinese private enterprises that would have been willing to form joint ventures or alliances with foreign companies Many of them would have chosen to go public (including on the overseas stock market) However, after witnessing so many internal integration problems among the parties of joint ventures, as well as the strengthened domestic and overseas regulations on the public companies, Chinese private entrepreneurs have realized that capital is a double-edged sword As long as they have other means to obtain capital, they will not likely choose a joint venture, alliance, or going public In a sense, is this not a reflection of their experience, maturity, and wisdom? Made in China: Secrets Of China’s Dynamic Entrepreneurs By Winter Nie, Katherine Xin and Lily Zhang Copyright © 2009 John Wiley & Sons (Asia) Pte Ltd A A P P E N D I X Interview Questions Please give a brief introduction of your personal background and experience growing up Please give a brief introduction about your experience setting up your enterprise and its current status Please give a brief introduction of the industry your enterprise is engaged in What is your perspective of the industry? Are you planning to enter other industries or areas, or will you continue to focus on the present industry? Which type of enterprise is your main competitor (POEs, SOEs, or FIEs1)? Where does the competitive advantage of your enterprise lie? Is it in strategy, business model, or marketing? What stages of growth has your enterprise gone through? What are the corresponding strategies and priorities in management for the different stages? What is your present strategy? What is the biggest challenge in implementing the strategy? What is the organizational structure of your enterprise? How does it evolve into the status quo? What measures have you taken in areas of corporate culture, recruitment, employee training, and incentive mechanism? 199 200 Made in China Do you think the capital structure of your enterprise is reasonable? What is your biggest problem in financing? How you solve it? What you think are the bottlenecks in your future development? Is your spouse, child/children, or other relatives involved in the management and operations of your enterprise? What are the respective advantages and disadvantages in running the enterprise by “insiders” and running the enterprise by “professional managers”? In your opinion, what personality characteristics are most important to success? Note There are three main forms of foreign investment in China: equity joint venture, the cooperative or contractual joint venture, and the wholly-foreign-owned enterprise They are collectively called foreign investment enterprises (FIEs) Made in China: Secrets Of China’s Dynamic Entrepreneurs By Winter Nie, Katherine Xin and Lily Zhang Copyright © 2009 John Wiley & Sons (Asia) Pte Ltd B A P P E N D I X List of Companies 201 Chengdu 1995 Aiminger Hangzhou Hightex Co., Ltd., Textile Co., Ltd Hangzhou Wangu Chemical Co., Ltd Hainan Zhongxin Lighting Co., Ltd Guangdong Opple Racing Club Fortune Automobile Solution, Inc Essence Technology Co., Ltd Eitong Air Express 1999 1997 1997 1995 2000 2003 1995 Hangzhou Hangzhou Shanghai Guangdong Shanghai Shanghai Shanghai Shanghai 1997 Dynaforge Tools & Hardware Co., Ltd Shanghai 2003 Bridge HR Chengdu Company of Manufacturing Leather Goods Headquarters Location of Establishment Year of Name Company Hangzhou Hangzhou Hainan Guangdong Wenzhou Shanghai Hangzhou Shanghai Shanghai Chengdu Startup Place of Lu Wenlong Yan Han Xianglai Cao Yaohai Wang Michael Ma Chen Xin Lou Xiuhua Zhang Jason Zhengyu Hou Qiongying Liu Name Leader NA 1957 1966 1967 1965 1969 1968 1969 1969 1970 Birth Year of Male Male Male Male Male Female Female Male Male Female Sex Zhejiang Zhejiang Hubei Zhejiang Zhejiang Shanghai Zhejiang Shanghai Jiangsu Sichuan Province Native School Junior Middle College Non- degree Textile Textile Chemicals foreign trade) of Trade (mainly Lighting Products College Manufacturing of Middle School Automobile Racing IC Design Express Delivery and hardware) Foreign Trade (tools Senior Middle School Senior College College College College Employment Service Shoes School Non- degree Manufacturing of Junior Middle Education Industry 202 Made in China 1967 1967 1966 Birth Year of Male Male Male Sex Hunan Hebei Beijing Province Native Master College College Education Freight Agency and International Cargo Software Telecommunications Wang Zhi Cheryl Chen Hailiang Hou 1968 1970 1963 Male Male Male Jilin Shandong Henan chemical industry) Foreign Trade (chemicals: ink College Cable material Manufacturing of Non- degree College Co., Ltd Degree Master (Continued ) machinery) for engineering control systems automatic (agenting Foreign Trade Shanghai Shanghai Shanghai meters for petro- instruments and (agenting SPN Technology Shanghai Shanghai Shanghai Degree material) 2000 2003 1997 Liang Qihua Co., Ltd Yang Chemical Shanghai Xhan Ltd Development Co., Enterprise Shanghai Original Controls Co., Ltd Foreign Trade Shanghai Xuehong Chang Tong Liqun Name Shanghai KeyPoint Shanghai Shanghai Beijing Startup Place of Industry Express Delivery 2000 Shanghai Beijing Headquarters Location of Leader Ltd Global Freight Co., Shanghai Compass 2003 1996 Runway Technology Co., Ltd Establishment Year of Name Company Appendix B 203 Tianjin Song Qiang Gao Qi Name 1969 1967 Birth Year of Male Female Sex Tianjin Jiangsu Province Native College College Non- degree Education Import and Real Estate Industry College Communication Shanghai Shanghai Cui Lijian 1973 Male Shandong College Non- degree Engineering Telecommunications Estate Agriculture and Real Restaurant, Modern (chemicals), 2002 Sichuan Zhicheng Male Foreign Trade 1962 Metal Tony Zhang Tony’ s Group Shanghai 1997 Ltd Shanghai Processing of Waste Tianjin Suzhou Startup Place of Leader Metal Products Co., Tianjin Longtaixiang Ltd Development Co., 2000 Suzhou 1997 Suzhou Merryland Real Estate Headquarters Location of Establishment Year of Name Company 204 Made in China Made in China: Secrets Of China’s Dynamic Entrepreneurs By Winter Nie, Katherine Xin and Lily Zhang Copyright © 2009 John Wiley & Sons (Asia) Pte Ltd Bibliography Blue Book of Non-State-Owned Economy 2005–2006 All-China Federation of Industry & Commerce Bai, Shouyi An Outline History of China Foreign Languages Press, 2002 Cai, Fang, and Lin Yifu China’s Economy China Financial & Economic Publishing House, 2003 Dong, Fureng The Economic History of the People ’s Republic of China Economic Sience Press, 1999 Editorial Board of Exploring Civilization Series Exploring Civilization—The Han Dynasty Daxiang Publishing House, 2002 Huyghe, Francois-Bernard, and Edith Huyghe The Empire in the Mirage: People on the Silk Road, Deities and Mythology Kashgar Uighur Publishing House, 2004 Lan, Yong A Historic Geography of China Higher Education Press, 2002 Ma, Licheng The Great Breakthrough—The Evolution of Private Economy in China AllChina Association of Industry and Commerce Publishing House, 2006 Ning, Yi Chinese Business Wisdom: The Secret to Success of Shanxi, Anhui and Zhejiang Merchants Dizhen Publishing House, 2006 Pan, Xiaoping Anhui Merchants: the No.1 Merchant Group of the Ming and the Qing Dynasties China Radio & Television Publishing House, 2005 Porter, Michael Competitive Advantage Free Press, 1998 Redding, S Gordon The Spirit of Chinese Capitalism Walter de Gruyter Inc., 1995 Ronan, Colin A The Shorter Science and Civilization in China Cambridge University Press, 1995 Sun, Tao On Shanxi Merchants China Morden Economic Publishing House, 2006 Wild, Oliver The Silk Road http://www.caissoas.com/CAIS/Geography/silk_road htm, 1992 Wu, Jinglian Understanding and Interpreting Chinese Economic Reform Yuandong: Publisher of Shanghai, 1999 Wu, Xinhua The Ringing of Camel Bells: The Silk Road in Ancient China Chengdu: Sichuan People’s Publishing House, 2004 Xu, Dixin, and Wu Chengming A History of Chinese Capitalism: Chinese Capitalism in the New-Democratic Revolutionary Period People Press, 2005 205 206 Made in China Xu, Dixin, and Wu Chengming A History of Chinese Capitalism: Chinese Capitalism in the Old-Democratic Revolutionary Period People Press, 2005 Xu, Dixin, and Wu Chengming A History of Chinese Capitalism: the Emergence of Chinese Capitalism People Press, 2005 Yun , Guanping, and Chen Qiaozhi Overseas Chinese Enterprises in South East Asia Economic Management Press, 2001 Zhong, Pengrong The Code of Shanxi Merchants China Small Medium Enterprises, December, 2006 Made in China: Secrets Of China’s Dynamic Entrepreneurs By Winter Nie, Katherine Xin and Lily Zhang Copyright © 2009 John Wiley & Sons (Asia) Pte Ltd Index Advertisement, 6, 9, 10, 18–19, 20, 32–34 Aiminger, 47, 95, 96, 97, 98, 99, 125, 142, 147, 148, 150, 164 Aiminger Leather Goods (see Aiminger) Alibaba, 28, 33, 34 Alipay, 29–30 Anhui Merchants, 59–63, 65, 69 Aokang, 193–194 Auto Projects Group, 194, 195 B&Q, 190 B2B, 28 Baidu, 40 Bottleneck, 163–167 Brand, 5–7, 12, 14, 18, 21, 193, 194 brand agent, 139, 141–143 brand building, 48, 64, 143 brand evaluation, 42 brand owner, 139, 141–143, 166 Bridge HR, 47, 102–107, 118, 133–135, 146, 151, 178, 184, 185, 188, 192, 195, 198, 202 Business model, 30, 66, 84, 88, 91, 101, 105, 106, 125, 130, 137, 140, 167, 174, 186, 199 Business partner, 67, 132, 181 Business strategy, 98, 105, 130, 131, 139, 140, 143, 166, 183, 196 C2C, 27, 28, 33, 35–36 Cao Xianglai, 112, 128, 140, 146, 162, 172, 176, 177, 179, 187, 202 Chang Xuehong, 115, 130, 146, 154, 166, 173, 174, 178 Chen, Cheryl, 122, 149, 154, 166, 175, 203 Chen Xin, 137, 202 Cheng Ho, 58, 59 China Central Television (CCTV), 6, 10, 22 China International Intellectech Corporation (CIIC), 102, 106, 107, 133, 192 China National Chemical Construction Company (CNCCC), 128, 129, 180 Cisco, 42, 186, 187 CNICE, 23 Coke, 7, 8, 10, 25 Collaborate, 10–15, 138, 191–198 Compass Global Freight, 47, 115, 130, 146, 154, 166, 173, 174, 178, 193 Competition, 25, 37, 39, 40–45, 77, 91, 102, 141, 165, 183–190, 191 Corporate culture, 31–32, 104, 147, 148–149, 180, 199 Cui Lijian, 136, 137, 197 Cultural Revolution, 4, 18, 48, 76, 79–81 207 208 Index Daewoo, 194, 195 Danone, 3, 10–15, 17 Dell, 40 Deng Xiaoping, 83, 94, 100 Development, 33, 57, 60, 65, 73, 83–84, 117, 138–139, 147, 163, 192 career development, 104, 115, 147, 150, 151 development zone, 89 economic development, 17, 46, 82, 83, 130 estate development, 47, 132, 150, 161, 176, 204 future development, 45, 197 market development, 33, 163 software development, 119, 131, 185 Diao, 17–19, 20–21, 23 Differentiation, 29–31 focus differentiation, 130, 131–133 product differentiation, 17–19 service differentiation, 130 Distribution, 8–10, 14, 22, 24, 68, 69, 74, 78, 80, 152, 194 distribution center, 21, 22 distribution channel, 14, 21, 23 distribution network, 8, 9, 10, 24 distribution strategy, Dynaforge Tools & Hardware, 47, 161, 189–190, 202 EachNet, 27, 30, 37 Easypay, 30 eBay, 27–38 eBay EachNet, 27–35 Eitong Air Express, 47, 115, 126, 127, 159, 173, 175, 177, 178, 184, 202 Entrepreneur, 46–48, 82–84, 99–102, 111–123, 125, 130, 158, 174, 177–179, 181, 184, 185, 189, 198 Essence Technology Solution, 47, 202 Export, 44, 49, 51, 61, 74, 102, 128, 131, 186 Foreign Enterprise Human Resources Service Company (FESCO), 102, 106, 107, 133, 192 Foreign Investment Enterprises (FIE), 50, 121, 200 Future Cola, 7–10 Galanz, 44, 45 Gao Qi, 132, 150, 161, 162, 176, 204 Geely, 194–195 Geox, 193–194 Google, 34–35, 40 Guanxi, 180–181, 197–198 Haier, 36, 41, 126 Hainan Zhongxin Chemical (see Zhongxin Chemical) Han Dynasty, 57, 58, 73 Hangzhou Wangu Textile (see Wangu Textile) High-end market, 19, 20, 22–25, 131, 132, 142 Hightex, 47, 148, 153, 163, 174, 203 Hou Hailiang, 116, 140, 148, 156, 158, 161, 175, 177, 179, 196, 197, 203 Hou Zhengyu, 99–107, 118, 133, 134, 146, 151, 178, 184, 198, 202 HP, 40 Huawei, 42, 118 Integration, 20, 77, 92–93, 102–103, 130, 134–135, 195, 198 Investment capital investment, 12 foreign investment, 13, 24, 102, 103, 196 Joint venture, 3, 4, 10–15, 18, 102, 126, 133, 154–158, 192, 195, 198 Keon, 19 KeyPoint Controls, 47, 139, 150, 155, 160, 165, 179, 181, 195, 203 Kuok, Robert, 75–76 Index 209 Lenovo, 36, 40 LG, 44–45 Liang Qihua, 139, 150, 155, 157, 160, 165, 179, 181, 203 Liu Qiongying, 82, 93–99, 125, 142, 147, 148, 154, 159, 164, 176, 177, 184, 202 Longtaixiang Metal Products, 47, 114, 127, 128, 135, 204 Lou Xiuhua, 115, 126, 154, 159, 173, 175, 176, 177, 178, 184, 202 Low-end market, 20, 46, 131, 144, 183 Low entry barrier, 189 Lu Wenlong, 82, 113, 148, 152, 154, 163, 172, 173, 180, 181, 196, 203 Lu Zuofu, 77 Nice Group, 17–25 Niche market, 133 Ningbo merchants, 69–73, 84 Ma, Jack, 28, 29, 32 Ma, Michael, 84, 87–93, 121, 151, 159, 164, 202 Market consumer market, 75 domestic market, 13, 44, 45, 142, 143, 164 end market, 19, 20, 22–25, 46, 131, 132, 142, 144, 183 local market, 40, 41, 59, 114 market opportunity, 138 market share, 7, 10, 20–21, 25, 28, 34–36, 40–45 mass market, 132 niche market, 133 specialist market, 133 Market economy, 14, 82, 125, 129, 175 Marketing advertisement marketing, 6, 20, 34 online marketing, 29, 34–35, 36 marketing strategy, 48, 63 marketing tactic, Marketplace, 28, 80, 183 MBH, 195 Merryland Real Estate, 47, 132, 150, 161, 162, 176, 188, 192, 204 Ming Dynasty, 58, 59, 60, 66, 69 Multinational Company (MNC), 4, 10, 17, 20–23, 25, 39, 40–43, 46, 183 Partnership, 3, 65, 132, 165–166, 198 Paypal, 29–30 Pepsi, 7, 8, 10, 25 Performance evaluation, 97, 149–153 Private economy, 76, 79, 80, 81–84 Private Owned Enterprises (POE), 4, 25, 39, 46–47, 48–53, 83, 116, 135, 138, 146, 147, 153, 154, 166, 184, 188, 191, 193, 195, 196–198 Procter & Gamble, (P&G), 17, 19–22, 24, 25 Product design, 18, 193–195 Public listed companies, 39 Pudong New District, 83, 100, 103, 105, 115 Putzmeister, 43 OBI, 190 Opple Lighting, 47, 131, 143, 147, 202 Opportunities, 74, 118, 125–128, 130, 184–185, 191–196 Organizational capability, 146–153 Original Enterprise, 47, 116, 140–141, 148, 156, 157, 158, 166, 167, 175, 177, 195, 196, 197, 203 Original Equipment Manufacturing (OEM), 21, 22, 139, 142, 193, 194 Outsourcing, 130, 134, 140–141, 147, 192–193, 195 Qiao Feng, 31, 32 Qing Dynasty, 60, 61, 66, 69, 70 Research and Development (R&D), 48, 64, 98–99, 121, 131, 134, 138, 140–144, 194 Robust, 6, 7, 13 Runway Technology, 47, 117, 118, 127, 164, 186, 203 Rural, 8, 10, 18, 19, 24, 25, 81, 87, 102, 185 210 Index Safepay, 30 Sahaviriya Mill Plate, 75 Salim Group, 74 Sany Heavy Industry, 43 Shanghai Original Enterprise Development (see Original Enterprise) Shangri-la Hotel, 75, 76 Shanxi Merchants, 59, 64–70, 84 Siemens 41 Song Qiang, 114, 127, 135, 137, 204 South China Speeches, 83, 100 Special Economic Zones (SEZs), 24, 82, 113 Speedup Automobile Racing Club, 47, 91–93, 121, 159, 164 SPN Technology, 121, 141, 151, 156, 162, 165, 203 SSP Group, 75 State Owned Enterprises (SOE), 20, 39, 49, 50, 102, 112, 115, 116, 122, 126, 128, 129–130, 133, 155, 175, 185, 192 Strategy brand-building strategy, 48, 143, 166 buyer-focused strategy, 29 distribution strategy, global expansion strategy, low-cost strategy, 130, 131, 197 low-price strategy, 21, 102, 133, 195 marketing strategy, 48, 63 mid-range strategy, 21 price strategy, 22 Sun, Toto, 31, 34, 35, 36 Suzhou, 63, 104, 132, 178, 192, 204 Suzhou Industrial Park, 192 Talent, 149–153, 156, 163–165 Tan Chong Group, 74 Taobao, 27–37 Tianjin Longtaixiang Metal Products Company (see Longtaixiang Metal Products) Tom Online, 27, 32 Tong Liqun, 117, 127, 164, 186, 203 Tony’s Group, 47, 120, 121, 129, 145, 149, 152, 158, 159, 185, 187, 204 Township and village enterprises (TVEs), 81, 82, 114, 173, 174, 181 Trade, 28, 57, 58, 59, 60, 61, 66, 71, 74, 96, 120, 140, 144, 189 Transformation, 79, 138–146, 163, 165, 185 Unilever, 19–22 United Overseas Bank, 75 Urban, 8, 19, 51, 52, 82, 87, 126 Valleverde, 194 Value chain, 25, 92, 98, 141, 183 Wahaha, 3–15, 17, 21, 25 Wang Yaohai, 131, 143, 154, 163, 172, 177, 198, 202 Wang Zhi, 121, 141, 149, 151, 156, 162, 165, 166, 203 Wangu Textile, 47, 119, 131, 132, 142, 151, 164, 185, 188 Wenzhou, 17, 84–85, 87, 88, 89, 90, 193, 202 Wholly owned enterprises, 154 Xhan Yang Chemical, 47, 122, 149, 166, 175, 203 Yan Han, 119, 131, 143, 164, 202 Yangshengtang (YST), 6, Zhang, Jason, 161, 202 Zhang, Tony, 47, 120, 129, 144, 149, 158, 160, 175, 179, 185, 187, 204 Zhejiang, 4, 6, 17, 18, 63, 69, 82, 115, 148, 197, 202, 203 Zhicheng Communication, 47, 136, 197, 204 Zhongxin Chemical, 47, 82, 112, 128, 134, 140, 146, 150, 162, 165, 172, 179, 187, 189, 202 Zhuang Qichuan, 18–23, 25 Zong Qinghou, 3–8, 12–13, 21 ... by Big Market Share 34 eBay China or China Piece of a Global eBay vii 36 viii Made in China Chapter 4: Who Are They? 39 Chinese POEs: MNC’s Main Competitors in the China Market 39 Small- and Medium-Sized... A: Interview Questions 199 Appendix B: List of Companies 201 Bibliography 205 Index 207 I P A R T THE COMPETITION BETWEEN MNCs AND LOCAL POEs IN THE CHINA MARKET Made in China: Secrets Of China s... not penetrated 20 Made in China Since Unilever’s entrance into China in 1986, it had acquired and merged over a dozen local enterprises in order to expand its business in China From 1986 to 1999,