China Corner Office

This week on China Corner Office, Chris Marquis talks to Kenneth Jarrett, senior advisor at Albright Stonebridge Group about how multinationals can deal with the increasingly frequent consumer boycotts that occur in China. While many international brands such as the NBA, H&M, Walmart, Zara, Nike, and others have found themselves in recent years on the wrong side of Chinese consumer ire, not all boycotts are the same. Drawing on decades of business and diplomatic experience in China, Ken describes that there are different types of boycotts — depending on the extent of consumer and/or government involvement — and correspondingly different strategies companies can take when dealing with them. Also discussed are the challenges local China offices have in dealing with headquarters during boycotts and how multinationals in China can develop effective relationships with the government.

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This week on China Corner Office, Chris Marquis talks to Dan Digre from MISCO a St. Paul Minnesota-based company that produces audio speakers. Over the past 20 years, MICSO has built a successful business by importing low-tech components from China, and then through expertise in engineering, design and final assembly and testing, reconfiguring them into high-tech products. But this model is threatened by the China tariffs. Dan describes how the components that he imports are hit with a 25% tariff, yet if he were to fully assemble the speakers in China instead of the U.S. and import the finished product, the tariff would only be 7.5%. The tariffs thus not only hurt his sales due to his higher costs, but also given this discrepancy, encourage further loss of jobs in the U.S. and offshoring of the type of higher value-added manufacturing MICSO does.

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This week on China Corner Office, Chris Marquis talks to Doug Guthrie, who from 2014 to 2019 led Apple University’s efforts on leadership and organizational development in China. Apple recently became the first company ever to reach a $3 trillion market cap, and Doug and Chris discuss how Apple’s current success is due in large measure to the deep partnerships the company has in China. A very visible part of this, of course, is the impressive sales of iPhones and other products to Chinese consumers. In the last 5 years, about 20% of Apple’s sales have been in China. But as Doug emphasizes, an even bigger factor for the company’s success globally is the concentration of Apple’s supply chain in China. This allows Apple and other companies like Tesla to benefit from programs like the government's labor dispatch system, which channels hundreds of millions of migrant workers to companies that need them on a temporary basis. All this leads to incredible profitability for the company, and as Doug argues, it cannot be replicated anywhere else in the world. But as you'll hear, this gives the Chinese government significant leverage over companies such as Apple and Tesla that are essentially “married to China.”

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This week on China Corner Office, Chris Marquis talks to Frank Lavin, former U.S. Ambassador to Singapore who is chairman and founder of Export Now, a company focused on helping international brands enter China. Frank recently published The Smart Business Guide to China E-Commerce, a highly readable book that has many great points and recommendations about the topic. In this podcast, Frank not only discusses key features of China’s e-commerce ecosystem and important platforms like Alibaba, JD, and Pinduoduo, but importantly, how and why mid-tier American companies should focus exclusively on such channels as opposed to more traditional brick and mortar presence. Frank also provides detail on how despite U.S.-China trade tensions, many US firms have experienced their best year ever in the China market, and also why the phenomenon of dàigòu 代购, or gray market sales can be an international brand’s best friend in China.

For more on this topic, please check out Frank Lavin’s recently published: The Smart Business Guide to China E-Commerce 

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This week on China Corner Office, Chris Marquis talks to Eduardo Lacerda, vice president of marketing for Danone Waters China (DWC), the Guangzhou-based subsidiary of Paris-based food and nutrition multinational Danone S.A. Lacerda discusses in detail how DWC addresses the core tension for MNCs that want to do business in China: how to draw on global experience and frameworks while also effectively localizing the business and products. A case in point is the company’s well-known health drink Mizone, which was developed in China and has many seasonal and regional flavors tailored to appeal to Chinese consumers, particularly younger ones. But as Lacerda discusses, its low sugar profile and nutritional properties reflect Danone’s mission to deliver healthful products to consumers. Relatedly, we also discuss the company’s impressive environmental work at its factories and recent certification as a B Corp, and how it met the demands of this global framework for social and environmental impact.

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This week on China Corner Office, Chris Marquis talks to Xavier Naville, who candidly writes about his many ups and downs doing business in China in The Lettuce Diaries: How A Frenchman Found Gold Growing Vegetables In China. Xavier discusses many of the illuminating experiences he had over his 15 years in China, including how he dealt with the country's dispersed and complex produce supply chains in ways to make sure farmers were treated fairly while also meeting his customers' quality needs. Xavier was the only non-Chinese at a firm of 1500 employees and so he also has a lot of insights into managing a Chinese workforce. Looking forward, Xavier also expresses an optimistic perspective on China’s unique agriculture sector and how through platforms like Pinduoduo smaller farms are now able to sell their products directly to consumers — and how, as a result, China is now leading the world in the digital grocery space.

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This week on China Corner Office, Chris Marquis talks to Alison Schonberg, manager of Business Advisory Services at the US-China Business Council. Alison recently authored a report on government procurement in China, and while the topic may sound somewhat dry, it is in fact of enormous consequence for American firms operating in China. Alison discusses how government procurement is designed in China, and ways that governments at different levels and state-owned enterprises are able to execute an implicit “buy Chinese” policy, which in some cases is in violation of international agreements, including terms of China's WTO accession. Also discussed are the number of ways that American companies are working with local companies and governments to deal with this increasingly restrictive environment.

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U.S. Trade Representative Katherine Tai recently announced the results of the long-awaited strategic review of the U.S.-China trade relationship, yet many open questions remain. In this episode of China Corner Office, Chris Marquis is joined by Craig Allen, president of the US-China Business Council (USCBC), and Anna Ashton, vice president of government affairs at the USCBC, to discuss the state of the U.S.-China trade policy and what to expect in the future. In addition to reviewing the ongoing issues of tariffs and the phase one commitments, Craig and Anna reflect on how many events this fall such as the U.S.-China virtual summit, G20 meeting, APEC, and COP26 should provide further clarity to the U.S.-China relationship. Overall, the conversation takes a big-picture view of U.S.-China relations and how the Biden administration’s plans intersect with congressional priorities and also the strategies of our EU allies.

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While trade tensions between the U.S. and China continue to fester at the national level, there is significant variation in how those effects are being felt across U.S. states. In every state, there is a unique ecosystem that supports trade with China and other countries that track to the national situation to varying degrees. This episode examines on how firms in Michigan have continued to do business with China in recent years. Joining Chris Marquis is Mark Becker, Director of International Supply at Cherry Central Co-Op, a Michigan-based organization that buys and processes fruit from small farmers across the U.S. and Canada, much of which is exported to China. Mark also discusses how the trade tensions have affected his business, how Cherry Central positions and markets its products in China, how it is dealing with the global shipping crisis, and also how it takes advantage of state-based trade promotion resources. On this last topic, also joining the episode are three leaders from U.S. federal- and state-level organizations that provide export assistance to U.S. businesses, providing details on the variety of training, advocacy, market intelligence and networking services their organizations provide, as well as in some cases financial support of U.S. businesses international expansion efforts.

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This week on China Corner Office, Chris Marquis talks with Roberto Guidetti, CEO of Hong Kong-based food and beverage brand Vitasoy. They discuss how the company stands at the intersection of three seemingly inexorable trends: the growing acceptance of plant-based food products, sustainable business, and the China market. He reflects on how the global movement for plant-based protein is growing in China, and how Vitasoy’s different soymilk and tofu products are tailored to different markets. Roberto also discusses how the company has embraced sustainable business practices in the last decade, from the farmers that grow the soybeans to how the products are packaged and distributed. Finally, while Italian by birth, Roberto has worked in the Greater China region for over 20 years, including stints at P&G and Coca-Cola. He discusses how his diverse experiences in China have been shaped by this unique background and offers advice based on his experience for people interested in doing business in China.

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