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.
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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
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