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MASTER CLASS made in china On the right course "I know that other MBA programmes limit their students' international business experience to simply visiting foreign universities and companies, a sort of business tourism approach, but the University of Auckland course gives us the ability to take responsibility for the international business of our clients, adding theory studied in the class to practical learning experience on the ground." These comments stem from an Executive MBA student studying at The University of Auckland Business School. They were made on her return from Guangzhou, China where she and her MBA cohort had spent a week 'in market' evaluating opportunities for New Zealand client companies. And, as she indicates, the trip was far from an exercise in business tourism. To explain: the course focuses on preparing the students to assess the global business environment, and its associated risks, and to operate effectively within it from a point of New Zealand origin. What does that entail? In sum a student cohort of experienced business professionals (average age 40) are exposed to concepts of global mindset thinking, international strategy, market entry and risk management – and are then placed in a foreign market to apply these concepts on behalf of a New Zealand client company. That said attitude and pre-conceptions are the primary challenges faced by both the students and their clients. Almost inevitably both parties begin with a generic view of offshore markets such as China, coloured by a New Zealand-centric perspective of doing business and a belief that the product or service involved must have value in any given market, not least because it is of New Zealand origin. Almost inevitably, these assumptions are torpedoed within the first day or two on the ground. As each group researched the market, developed contacts and made company visits in Guangzhou they uncovered and justified opportunities for their clients. In doing so their assumptions were challenged and often disproved. In particular, value propositions that appeared sound and logical from an initial New Zealand perspective were found to have little significance in the reality of the Guangzhou environment. This outcome, in turn, required the students to rethink the positioning and market strategy for each client in order to achieve a successful and sustained market presence. It also created some spirited nightly discussion amongst the group as they shared experiences, observations and conclusions from each day's exposure to business in Southern China. 'The findings from investigating on the ground in China' wrote one group 'were, in many ways, surprising and very exciting'. Amongst the more surprising findings In the case of Guangzhou, seven companies were represented each with a specific market evaluation brief. These briefs ranged from cold chain technology to textiles to high-end food and beverage products, to wireless power to tourism. Some of the client companies had prior exposure in China, others did not. But all met the pre-conditions of capacity, capability and commitment in terms of their attitudes to successfully enter offshore markets. 36 | www.hermagazine.co.nz from Guangzhou: Chinese consumers have a well- • developed expectation of quality and are prepared to pay premium prices. In the food and beverage area these consumers are acutely aware of food safety and sanitation. As consumer confidence (and affluence) grows, Chinese customers are experimenting with, and embracing, new Western products and services. • Chinese consumers are not necessarily brand loyal, but they do draw a sharp quality perception between domestic brands (lower quality) and imported brands (higher quality). In this context, "New Zealand" has minimal brand recognition. • Chinese manufacturing and processing capability is not only cheaper than New Zealand, but is likely to be of higher quality. • Chinese cultural mindsets of relationship building and long term vision are remarkably akin to those of Maori, suggesting that collaboration with Maori business may provide a useful model of engagement for New Zealand companies seeking to enter this market. • The New Zealand/China Free Trade Agreement does provide "first mover advantage" for New Zealand companies entering China, but this window of opportunity is limited. • • • In terms of key recommendations for companies considering China: A long term commitment is essential, do not enter China for the one-off deal. It's all about relationships and building trust. Long distance management is a non-starter. Better to be there as often and as long as possible. It's best to have a local presence. • China is not like New Zealand. And it will not change to suit your comfort zone. Accept the need to adjust your thinking accordingly. • • Be prepared and willing to re-engineer your initial value proposition to meet Chinese expectations. New Zealand companies need to coordinate and collaborate to leverage resources and deliver more powerful value propositions. Peter R.D. Withers Director of Academic Programmes The University of Auckland Business School