Chinese enterprises must become wolves instead of sheep if they want to win in the competition for business after the country enters the World Trade Organization (WTO), a major business leader is warning.
"If we take the position of sheep, we will be devoured," said Zhang Ruimin, CEO of household appliances giant Haier. "If we become wolves, we will be capable of competing with our rivals."
None of the foreign companies that have entered or will come to China after WTO accession are charitable organizations, he explained. Their principal aim is to stomp out competitors.
To become wolves, Chinese enterprises must learn how the market works and take risks to beat competitors, he said.
"Opportunities exist in this challenge," Zhang said. "Only when we are bold enough to face the challenge can we have the opportunities."
A market system that places equal emphasis on both domestic and overseas expansion is key to survival. If the company is not successful domestically, it is doomed overseas, he said.
Still, that cannot be the only tactic because the international market is important, too.
When Haier started working to push into the world market even as an untapped market existed at home, some people did not understand why.
"If all Chinese enterprises want to enjoy meat at home, the meat will soon be finished," he said.
For the home appliance business, this was a sound strategy. China is one of three major world markets in this area, along with the United States and European Union. China's demand accounts for a third of the world's total, so taking a large market share here is critical to overall success and provides Haier with a solid foundation for overseas expansion.
The same is true, though, in reverse, Zhang said. Solid overseas marketing success will help at home, too.
Chinese enterprises ought to focus mainly on making quality products. Satisfied customers will reward firms with profits, he said.
Haier's strategy is paying off with expanded market shares in the United States and Europe. The company does not dominate there, but its reputation, capital supply and labour resources are helping make a difference in the bottom line.
"The key is meeting customer demands fast," Zhang said.
Foreign firms usually spend six months turning out new products, Zhang said. Haier takes two months, he claimed.
This difference is helping Haier grow their market shares on both domestic and foreign markets, he said.
(China Daily October 23, 2001)