Category Archives: BUSINESS IN CHINA

Practical insights into how Chinese companies operate, make decisions, and engage with overseas markets. Articles here focus on trust, alignment, communication, and the real-world dynamics that shape cross-border business outcomes.

BUSINESS IN CHINA

China Speed Won’t Stay in China. It’s Building Toward Your Home Market.

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China Speed is often discussed in business circles and in the news, usually in terms of the advantages it gives Chinese companies and how it makes competition harder for overseas companies in China. Today I want to talk about something all overseas executive teams should be taking even more seriously: the risk China Speed poses to overseas companies in their own home markets, and why operational change needs to become the new benchmark for survival.

Despite China’s incredible developmental speed, we have not yet seen a huge number of companies and industries clearly affected by it, which may explain the apparent lack of recognition of the danger for overseas markets. But there are already examples where China Speed has proven to be a deciding factor in overseas markets, including industries like fast fashion, batteries, and robot vacuums.

Today we’ll be going through several examples to explain why China Speed is most likely coming to your home market, if it’s not there already, and why your company needs to start changing now.

China Speed: A Refresher

Before we begin, I’d like to briefly reintroduce what China Speed is, rather than what it’s often assumed to be. It is not 996 overtime, recklessness, the creation of waste/inefficiencies, or a cultural trait. Below is a three-tiered model I use to describe China Speed to overseas companies and executives.

Infrastructure (Can’t Be Copied: China has built up structural advantages that a competitor can’t simply decide to replicate, because they took decades to build. Manufacturing hubs are linked together geographically, so a company can move from design to production without the delays of working across separate suppliers and regions. Government policy support is built to move at commercial speed rather than bureaucratic speed. And real-world deployment isn’t the finish line for R&D in China; it’s the starting point, with products launched and improved based on what happens in the market.

Market Pressure (Forced Speed): The China market is subject to rapid, cutthroat competition, based on several factors. First, the huge number of companies in the market, all trying to build new wealth and take advantage of new opportunities, creates a pressure all its own. That is combined with involution, a vicious cycle of continuous price cutting, which the government can’t completely rein in. Lastly, since the rise of social commerce, companies in China have been able to make use of near-instantaneous access to consumer purchases, feedback, and competitor actions.

Organizational Behavior (Can Be Learned From): Companies in China react to the very real market pressures, using the infrastructure in place, and make rational choices to survive. They find ways to move faster by concentrating authority closer to the customer, creating parallel teams to create internal pressure, killing unnecessary projects quickly, and settling for good enough.

There are three key takeaways from the above: first, the pressures from the China market are affecting overseas markets as more Chinese companies expand overseas to escape crushing competition at home. Second, the infrastructure China has developed over decades provides clear advantages in quality, speed, and price. And third, operational choices made by Chinese companies are usually very rational, and overseas companies may want to begin considering rational choices of their own.

Overseas Markets: When Companies React to China Speed Too Late

We’ve already seen clear examples of Chinese companies winning in the American, European, and other overseas markets. iRobot, the company that created the robot vacuum category, filed for bankruptcy in December 2025 as five Chinese firms captured roughly 70% of global shipments.

Northvolt, Sweden’s battery champion, collapsed after BMW canceled a $2 billion contract, the result of a gap so wide that Chinese competitors reached 96% production yield in four months while Northvolt took four years to reach 70%.

Forever 21 filed for its second bankruptcy in March 2025, closing all 354 remaining U.S. stores after years of significant losses. In its own bankruptcy filing, the company pointed to Shein and Temu’s ability to undercut on price as a key reason it lost its core customer base, the same price-and-speed combination that’s outpaced slower incumbents in other categories too.

I see the problem as three-fold:

  • Overseas brands were not paying enough attention to what Chinese brands were doing in China and how this could affect them in their home markets.
  • Overseas brands were not willing or able to make substantive changes to their operations outside of China.
  • Even when overseas brands tried to adapt, they could not do it in time, as Chinese companies were moving on a much faster timeline.

It is also worth noting that China Speed does create trouble for Chinese companies expanding abroad, in the form of legal issues and public opinion backlash. But this alone shouldn’t make overseas companies feel safe. An overseas market leader could face multiple Chinese competitors producing better products at lower prices and faster speeds than it can match. And it only takes one Chinese competitor to get it right.

The Fix Isn’t Culture. It’s Operational Change.

From the above, the competitive threat posed by China Speed and Chinese companies should be clear. And it’s not a problem that can be solved by tariffs or bans, especially for global brands competing in multiple international markets.

That doesn’t mean copying these moves one for one. Overseas companies operate under different constraints, answer to different stakeholders, and carry more global exposure than most local Chinese competitors do. The point isn’t to run the exact plays above; it’s to build your own version of the same underlying logic, one that fits constraints Chinese competitors don’t have to deal with.

Here’s my list of key changes overseas executive teams should be considering now:

Start Changing Now: One of the biggest mistakes overseas companies can make is waiting until the China threat is obvious before acting, since by then it’s usually too late. Moving beyond a sole focus on short-term results is the first, and perhaps most important, step for overseas executive teams to take.

Create Early Warning Systems: Too much happens in the China market without overseas companies being aware of it, taking it seriously, or having its significance survive the handoff from the China team to HQ. Overseas companies therefore need to create systems and teams to ensure they always get the real picture about what’s happening in China, no matter how uncomfortable it is.

Go on Offense: Too many overseas companies have been confident in their standing in their home markets and have only played defense against Chinese companies. But static defenses don’t work well against fast-moving Chinese companies, and overseas companies need a much more active, aggressive approach to survive.

Simplify Bureaucracy & Processes: This is a big one. Overseas companies simply move too slowly compared to Chinese companies, especially those with the capital and momentum to seriously challenge them in their home markets. Overseas companies need to find ways to simplify their structures and processes to move at least twice as fast as they normally would.

More Inter-office Exchanges: Lastly, inter-office exchanges between China team members and HQ team members, at the mid-senior level, could play an important role. Not only can they increase empathy among overseas HQ personnel toward the Chinese market and professionals, but they can give senior HQ leaders an important point of view they didn’t have before.

None of this, however necessary, will be easy. Internal change always creates resistance and dissension, and flies in the face of existing internal networks, priorities, and incentives. That being said, companies that don’t begin changing at least one to two years before a Chinese competitor becomes a serious threat likely won’t be around long enough to worry about it.

If you’re interested in thoughtful perspectives on China, cross-border work, and how culture, incentives, and organizations shape real outcomes, you’re welcome to subscribe to China Culture Corner and receive future posts by email.

I also share related ideas and longer-form video commentary on LinkedIn and YouTube, and post updates across the channels linked above.

If you or your organization is navigating China execution or cross-border alignment challenges, I work with teams on an embedded and remote basis. Reach out directly: Sean@SageSightConsulting.com

BUSINESS IN CHINA

LV Under Assault in China: When Companies Ignore Public Sentiment

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European luxury giant Louis Vuitton (LV) is losing a David vs. Goliath battle in a China trademark case, where the company already won its case in court but is losing public support after the case verdict went viral among China’s netizens.

The case revolves around Molly Tea, a local beverage brand founded in Shenzhen in 2021, built around jasmine milk tea and marketed as an aspirational brand centered on traditional Chinese cultural imagery. In just a few short years, the company has become a genuine success story, with 2,300+ stores in China and international locations across the US, UK, Canada, Australia, and Southeast Asia.

The problems with LV began when Molly Tea applied for trademark protection on its four-petal flower design, part of a broader brand identity built around simplifying Chinese cultural elements into geometric shapes.

China’s trademark office (CNIPA) rejected the applications. Following the rejection, Molly Tea still chose to use the design in its public marketing and advertising anyway. This led to the lawsuit, which was decided in LV’s favor: Molly Tea was fined $1.5 million (USD), ordered to stop using the contested design, and ordered to issue a public apology across all official channels.

But the real trouble for LV began only after they won in court.

What Really Got LV in Trouble in China

In the past six weeks since the Chinese court’s verdict was handed down, the case has gone viral on Chinese social media, with LV losing public support in China for several key reasons:

Cultural ownership: While LV’s brand story attributes the designs in question to Gothic and Japanese influences, many Chinese consumers instead traced those same designs back to Tang Dynasty art, part of China’s cultural heritage. This led to the image of a foreign luxury brand claiming exclusive commercial rights to aspects of the Chinese people’s shared cultural heritage, enough to leave a bad taste in many consumers’ mouths.

Power imbalance: LV vs Molly Tea was not a story of a Chinese company making inroads against LV in the luxury industry. To many Chinese netizens, it felt like a powerful European luxury conglomerate suing a smaller company that sold milk teas for $2.20.

A pattern of behavior: Over the past five years, LV has filed more than 1,700 trademark actions in China, largely against small shops, workshops, and local brands. In Chinese consumers’ minds, this made the story grow from one case against Molly Tea to the image of a global brand systematically attacking China’s street-level businesses.

Public humiliation: The final nail in the coffin for LV in the battle for public sentiment was the required public apology, which most sources agree must have been asked for by LV. For many in China, this went beyond a mere legal resolution into downright public humiliation, which is never a good look for an overseas brand in China given the country’s history with foreign powers from the mid-19th through the mid-20th century, a period still referenced today as the “century of humiliation.”

The thread that connects all these points is that LV had the law fully on its side in the Molly Tea case. Officially, they did nothing wrong. But they’re still losing where it counts.

The Problem Companies Make With Public Sentiment

The mistake many companies make is assuming everything can be resolved in the legal arena: Win a legal case? Great. Lose a case? Pay the fine and move on. But as we can see from the LV case, it’s rarely that simple.

I’ve seen this pattern time and again from inside the room where these decisions get made: companies focus on what works or makes sense legally and file legal cases without factoring in how consumers, media, partners, and other local stakeholders will react, and what biases they may develop.

The problem with legal first and public sentiment second, as we can see in the LV vs. Molly Tea case, is that while protecting IP can be very important to maintaining a strong brand in a new market, none of it matters if the consumers turn against you. No consumer trust equals no one to buy the brand you spent so much time and effort protecting.

If you’re interested in thoughtful perspectives on China, cross-border work, and how culture, incentives, and organizations shape real outcomes, you’re welcome to subscribe to China Culture Corner and receive future posts by email.

I also share related ideas and longer-form video commentary on LinkedIn and YouTube, and post updates across the channels linked above.

If you or your organization is navigating China execution or cross-border alignment challenges, I work with teams on an embedded and remote basis. Reach out directly: Sean@SageSightConsulting.com

BUSINESS IN CHINA

Trust Isn’t Universal: Where China-Global Companies Get It Wrong

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Trust is one of the most important aspects of China-Global business. It doesn’t matter whether you’re selling, operating, or partnering in a new market: success often depends on ensuring that the customer, team, or partner has a reason to trust you over the next best option. And it’s very easy to get wrong.

One of the challenges I often see in China-Global business is that companies, executives, and teams on both sides aren’t optimizing their actions to build trust in their new market. Instead, they’re often just following actions that have traditionally built trust in their home market.

In these cases, no one at the HQ questions the type of trust they need to build, or even whether they think of “trust” as a core problem. They simply focus on actions they assume to be correct and wonder why partners, customers, and employees continue to leave.

Building Trust Isn’t Universal

The key point to remember is that trust, and the reasons people and businesses extend it, are not universal. The actions that build trust vary based on the market, consumer, business, and need. More importantly, businesses change and evolve, as do their customers. Even if a business hits upon a winning solution for a given market, there’s no guarantee that it will continue to deliver results several years into the future.

Here are several examples of ways that companies with good intentions get trust-building wrong in new markets:

Global Brands Struggling in China: Many overseas brands have been struggling in China in recent years. Not because China is hard, but because they have failed to adapt to a market that no longer reveres overseas brands without question, and failed to account for the rise of local competitors who move faster than them and have better insights into local consumers.

This has resulted in overseas brands moving too slowly and offering categories that Chinese consumers were not interested in, or that did not provide value comparable to what Chinese competitors already offered. In short, they were expecting their global brand and foreign roots to build trust, even though in many industries it no longer matters in the ways that it used to.

Chinese OEMs Expanding Overseas: Chinese OEMs are very good at making high-quality products and tailoring them to exact buyer needs. I’ve been in the room in meetings with overseas buyers and have witnessed their focus and attention to detail.

The problem comes when many of these OEMs decide to expand overseas under their own brand name, and still act like trust needs to be built in the same ways it was before. This helps explain why so many Chinese OEMs continue to focus on product specs and have had trouble connecting and building trust with consumers.

China-Global Partnerships: I previously gave a presentation at a Chamber of Commerce event on cross-border business failures between Chinese and Latin American companies. One core issue that kept surfacing was how quickly the Chinese side expected projects to progress and how quickly they expected profits to start coming in.

When results didn’t come quickly, the Chinese side often pulled out, and the local partners and governments had never taken trust and expectations into account before signing the deal.

China-Global Leaders: You Need an Engine

If these failure points for building trust are so obvious, why don’t more companies take them into account when the cost of not doing so is the loss of revenue, market share, partnerships, and core employees?

The answer is that companies are complex systems, with built-in processes, culture, and incentives, all of which resist change when attacked from a singular direction. Companies need a combined “Engine” to build trust in new markets, even when it runs against conventional corporate operational patterns.

Here are my suggestions, based on fifteen years bridging the trust, collaboration, and operations gap between Chinese and overseas companies:

Diagnosis: The first step is a clear diagnosis, conducted either by internal or external experts, with the experience and ability to look beyond what’s considered normal or “right” internally, to focus on what the target customer, partner, or employee requires to build trust, as well as the existing internal actions and incentives that run counter to it.

Specialized HQ Teams: Organizations often change very slowly, which is why it can be effective to create specialized teams whose job it is to build trust in new markets and with customers and partners in those markets, the way new markets need.

Teams with incentives directly tied to the needs of customers and partners in overseas markets are often the only ones willing to make needed changes. And teams need to be based, in full or in part, at the HQ, because that’s where power rests, and that’s where change needs to begin.

Better aligned processes and incentives: Lastly, it is also necessary, in the longer run, to adjust HQ-wide processes to better provide support to overseas teams, partners, and employees. While specialized teams can provide effective short-term momentum and problem resolution, what they are able to achieve still depends on HQ resources and processes.

Chinese HQs that are unable to slow down when it’s needed will likely fail to build trust, and the same applies to overseas HQs whose slow processes and approvals can’t keep up with the needs of Chinese consumers and businesses.

Without an engine that aligns your entire HQ toward building trust for new customers, partnerships, and internal operations, it’s all too easy to end up following the wrong signals, which will undermine trust if they don’t destroy it completely, and leave openings for local competitors to leap ahead.

If you’re interested in thoughtful perspectives on China, cross-border work, and how culture, incentives, and organizations shape real outcomes, you’re welcome to subscribe to China Culture Corner and receive future posts by email.

I also share related ideas and longer-form video commentary on LinkedIn and YouTube, and post updates across the channels linked above.

If you or your organization is navigating China execution or cross-border alignment challenges, I work with teams on an embedded and remote basis. Reach out directly: Sean@SageSightConsulting.com