ties tend to be scarce, particularly in SME's, where employees often need to be general-
ists spanning several tasks and working in several areas at the same time. Furthermore,
the daily operation in the subsidiary of an SME is often focused on urgent, short-term
issues rather than long-term business development tasks. Ideally, a new Chinese
venture should start because the management at HQ identifies and believes in a new
business opportunity in China, therefore allocating sufficient resources for the subsidi-
ary in China to execute the business development project. However, this situation rarely
occurs as:
HQ will most likely have other promising projects competing for the same resources.
Odds are bad for a risky project in the Chinese mid-market compared to investments in
lower risk projects in more familiar and mature markets.
market will simply add a new business development project on top of all the other
pressing tasks in the subsidiary and naively hope that the employees can also solve this
task within their existing budget. However, it is a clear finding of the SfG project that a
business development project for the Chinese mid-market requires dedicated and com-
mitted resources in order to succeed.
local employees are close to the market and may easily be inspired during their regular
contacts with customers. However, the first glimpse of an idea rarely stands up to the
scrutinizing examination of any investor, not even within a company, where headquar-
ters may be considered an internal investor. Therefore, in most situations, the subsi-
diary must mature the new business idea before presenting it to HQ and requesting
more resources.
build up sufficient arguments to attract the attention of headquarters in Denmark in
order to get the resources to develop a proper project proposal and business plan. This
can be a deadlock, where the subsidiary "needs resources to get resources" to move
beyond the focus on daily operations and investigate the new possible business.
noticed a business opportunity in the lower mid-market. Part of his daily prod-
uct management job was to visit customers with quality complaints and scout
for competitors at trade fairs. These visits gave him an excellent opportunity
to discuss his new business idea with existing customers and to look for lower
level competitors at fairs. When he had gathered substantial evidence on the
business opportunity, he confronted top management at headquarters and asked
directly: What does it take to convince you about the business opportunity in the
Chinese mid-market?
to further investigate the opportunity, which eventually led to a full investment
in the business opportunity. In this case, lack of resources was overcome by
the local product manager, who had the drive and the courage to go beyond his
daily duties and widen, the lens with which he viewed the market.
don't drive their own car instead they have
a private chauffeur. Therefore, Audi improved
comfort and space for backseat passengers
by lengthening the cars for the Chinese
market. The extra-length L-models are a great
success in China.