Fitting China into your global footprint

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(chinadaily.com.cn)
Updated: 2008-05-23 15:20

3. Make your competency development strategy forward-looking

Once you have assessed the "China fit" of the competencies embedded in your current and future product portfolio, you can determine the development strategy for each of these:
· If the "China fit" of a competency is high and you master the competency well, it is natural to retain and fully exploit that competency in China.
· If the "China fit" of a competency is low and you don't master it well either, you should not maintain the development of the competency in China.
· If the "China fit" of a competency is high but you don't master the competency, you should consider building it in China.
· Finally, If the "China fit" of a competency is low even though you master it well, you should explore opportunities to milk it.

While making the above assessment, a couple of other considerations have to be made. First, not every competency that, at first sight, fits perfectly with China should effectively be developed there. Vice versa, not everything that initially does not fit well should be kept out. Before making the final verdict, you should consider also the expected future evolution of the competencies concerned. Competencies and technologies rapidly evolve in emerging markets. What makes little sense today can be the main thing tomorrow. Take, for example, liquid crystal display (LCD) manufacturing. Until recently, China possessed only competencies related to so-called 5th generation LCD manufacturing. Korean companies, on the other hand, already master 7th and soon 8th generation technology. However, investment in China is now rapidly pouring into upgrading LCD-related competencies to the level of the next generations. Soon China will also master LCD glass manufacturing – a skill globally found only with selected leading high-tech manufacturers.

Secondly, the successful deployment of one competency may depend on the availability of another. For example, certain R&D competencies are an important support to manufacturing competencies. The full cost-saving potential from mastering manufacturing competencies will only be reached if they are supported by a minimal set of development skills for introducing small design changes and steering local suppliers.

Last but not least, you have to take into account the available investment budgets. Budget constraints mean that not every competency that fits perfectly well with China can be developed at once. However, by making smart make-or-buy decisions, you can greatly limit the investments required for non-core competencies.

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