By Laura Mitchelson

 “A strategy without intelligence is not a strategy, it’s merely guessing.”
Douglas C. Bernhardt, 1997.

Good advice is often simple and succinct. But how simple is the above quote? While the majority of companies value the wisdom of a phrase like this, how many are equipped to realize it?

The China Potential

Beyond the media coverage of GDP growth rates that are remaining strong despite the current climate, managers in China are faced with a challenging set of business decisions. What sets the success stories apart from the failures is the extent to which these decisions are informed by detailed, reliable, accurate and timely intelligence. How does a company get that competitive edge?

Requests for strategic intelligence are steadily on the rise globally. China is a competitive business environment, with many international companies having now operated here for a number of decades and with a daunting spread of local competitors. The importance of the market means companies are under pressure to get things right early and to hit aggressive sales and business growth targets. This means making informed business decisions quickly. Managers need market mapping, deep understanding of supply chains, knowledge of where the decisions are made and of who controls what and where. Strategic intelligence is a first step. From a global perspective, Fortune 500 companies are already monitoring the moves of China’s successful domestic companies and the techniques for tracking those moves need to be increasingly sophisticated. There’s great value for smaller companies too, especially in terms of being ahead of your competitors. Take the example of the road safety equipment manufacturer, who discovered through strategic intelligence that a competitor had already registered their trademark for a similar product range in China. Primary research methods and an analysis of the competitor’s company finance information, helped to establish that the competitor planned to expand into overseas markets. The implications for future decision making were significant.

What exactly is strategic or competitive intelligence?

Strategic intelligence is a systematic and ethical program for gathering, analyzing, and managing external information that enables your company to make informed business decisions. By legally collecting and analyzing a range of information, such as databases and “open sources”, business intelligence can also highlight the capabilities, vulnerabilities, and intentions of business competitors.

It’s Tough

The very nature of strategic intelligence means that much of what researchers discover is new and surprising. This is particularly true of intelligence gathering in China, where rapid changes in the commercial landscape result in immediate changes to commercial structures and processes. Projections change frequently, to the extent that an industry-specific report can become outdated in 6 months.

As published commercial information is limited, the role of the researcher also encompasses that of a communications channel.

Cultural considerations

The culture-specific aspects of a market always present an interesting challenge to the business intelligence professional and China is certainly no disappointment in that respect. Firstly, there’s communication. The Chinese language is often vague and somewhat poetic where English would be specific and succinct. Often in our office in Shanghai, when a vague approach is required and language is optional, we’ll choose Chinese over English, as it allows for more flexibility.

Secondly, is the approach to information collection and dissemination. Protecting information is an important characteristic of the local culture, along with a reluctance to be held responsible for losing it. If a research respondent perceives any risk associated with releasing information or providing feedback, they will often choose to simply provide no response at all. There is little incentive for the average purchasing manager or even government employee to provide information to an external party. In response to the specific risks associated with passing on information, and since the field of market research is also relatively new in China, researchers must assure respondents of the standard practices and procedures that are designed to protect them and the information they disclose.

Having said that, China presents a dynamic, fast-paced business environment, that embraces an adaptable ‘can-do’ business ethic. In a country often considered to be mysterious and unpredictable, we find many of the respondents we speak to are open and keen to share knowledge. As the fields of business intelligence and industry research are new to most respondents here, many of the interviews and discussions we hold on behalf of our clients provide refreshing and innovative feedback.

Another key aspect of the local culture which is often overlooked is its sheer enormity. In a market the size of China, geographic differences are wide and industries are often fragmented. Extracting comment on the nature of one industry across the entire country is unrealistic. It is often advisable to collate regional research from across the country to build the national picture. China’s administration according to province, municipality, district, town and village means a senior manager in the province of Zhejiang may well assume that a researcher is only considering Zhejiang province when posing questions about issues such as the development of an industry over the coming 5 years. The challenge for the researcher is that if they emphasize that a national perspective is being sought, it’s possible that the respondent will feel ashamed of their lack of broader knowledge and become uncooperative. For this reason, researchers in China need to carefully ascertain whether a subject is commenting on the local picture and precisely how local it is.

These geographic differences extend to local business practices and customs. With companies based in Beijing, for example, it’s often a good idea to send a fax to lay down the groundwork for a phone conversation. On the other hand, in Shanghai, business is conducted predominantly over the phone. In Beijing, it can be necessary to conduct a
face-to-face meeting at the outset before further meetings are agreed to. This extents the timeline on projects, and in our experience, it’s difficult for clients outside China to understand the significance of this initial face-to-face meeting. The value of recognizing a custom such as this is enormous, as there is often a transformation in attitude on the local side.

Patience is a virtue – admit early on in the strategic intelligence process that you are never going to have enough data and work to piece together parts of the puzzle over time.

Looking ahead

For start-up businesses and major corporations alike, the value of information and local market knowledge is crucial. As a result, our clients and our expertise are becoming increasingly diverse. Over the coming 3 to 5 years, we expect the demand for strategic intelligence to increase rapidly.

The companies which are most successful are those which are adept at responding to change. They’re creative and flexible in how they respond to the market, manage change within their strategy and processes very well and are keen to learn lessons from others.

The market is complex and ever changing. Strategic business decisions must be informed by strategic intelligence, which includes insight into customer, market and competitor behaviour. Specialized analysis, individually tailored solutions and valued insight must all be taken into consideration. In China, guesswork just doesn’t cut it.

Laura Mitchelson is Managing Director of Amber, a Shanghai-based provider of customized market and competitive intelligence and business analysis in China.