– Thoughts on Strategy and Management

Critical success factors for China

ChinaQuite recently I have found a very interesting study concerning success factors. A large strategy consulting company did analyze these factors for Chinese companies abroad. To compete abroad four major success factors were described:


  1. Productivity and quality need to be improved. It is expected that in the next couple of years the salary level in China will raise, hence the role of technology and process in productivity will become more important.
  2. R&D activities have to be increased. China competes in industries, in which R&D capability is a competitive factor. Hence China has to invest in both product technology and production processes.
  3. Strong brand recognition. For the next step in the competition in the marketplace it is crucial to have recognizable brands in place. Those brands have to be well known outside China, too. At present there are just a few brands that fulfill these attributes.
  4. Human resources and access to skills and talent. At present the shortage of skilled human capital for international business it one of the largest disadvantages for China. Senior leadership, marketing, operations and R&D are the management areas that face the gap.


To be precisely there was a further success factor: Usage of external consultants.  Well, I do not see this as a success factor, since it is more an option to solve issues 1 to 4. Of course it is possible to close some human capital and knowledge related gaps using external consultants, but it is just an option at the end of the day. Furthermore it does not fulfill the criteria for a competitive advantage. It is not a sustainable feature and cannot be protect from copying. “Everyone” (all what it takes is money) can hire “appropriate consultants with world-class credentials”.

Furthermore we have to consider that China has made enormous improvements in the last decade; hence I expect that China will solve the above mentioned issues very quickly. My personal assumptions: In the next decade China will solve issue 2 and 3; in the next two decades 1 and 4. At the end of this century China is likely to be the most powerful nation in the world.

The  study is available as pdf-file here.

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