Bloomington bars and Kelley professors

I had lunch with a Kelley alumnus who has a very unique perspective because he is originally from Spain, worked in China, came to Kelley, and then returned to China. He currently helps Spanish companies enter the Chinese market, which is not an easy task.

He explained that people get very excited about China when they evaluate the revenue potential. After all, China has 1.3 billion people. (To compare, the US has 307 million people.) Many people then get depressed when they try and fail at entering the market. There is no easy way to enter this market for a number of reasons. One needs to know how to utilize the government, work in an environment that consists of a lack of trust among business partners and suppliers, build guanxi, etc. The companies that still want to enter the market go to his company for help.

When we were in Huai’an, Sabrina, Guy, and I joked about importing hummus to this country. I learned about the challenges of importing food from the Kelley alumnus. He explained there is a great need for educating consumers, but there aren't a lot of venues to do so. Most Chinese don’t know what makes a good wine. They do care about their image, and want to make sure they look good when they give wine as gifts. It becomes even harder to build awareness for your product when you’re not a multinational corporation because you don’t have the resources to have sales force in all the stores. I’m guessing that packaging becomes that much more important. To make things more difficult for the business, there is very cheap competition and/or competitors that create fake products. As a result, effectively communicating the quality of your product become important.

Foreigners have to follow all the rules and laws in the country, but you may have an easier time if you have a Chinese partner. However, if you have a partner, then you have to make sure there is something in it for him, or have guanxi with the head of the company. Contracts mean very little. Also, if you want to question the supplier through the legal avenues, then it will probably be extremely expensive.

Our conversation then turned to life in Bloomington, Indiana. It was entertaining to talk about a place on the other side of the country with a new friend. We like some of the same professors, and I filled him in on some of the new bars.

(KFC is everywhere, yet US companies like Best Buy are closing stores in China. My dad just shared this article with me. Even Carrefour is closing some stores. What I can't figure out is how Yum! Brands has been so successful in China with KFC and Pizza Hut, but failed with Taco Bell.)