Cracking China: A Foreigner GM leading a Chinese Company

Despite the on-going trade war with the United States, this year’s Double 11 Global Festival continued to exceed expectations and break records, reaching RMB 268 billion or $USD 31.8 billion sales in 24 hours. In comparison, Amazon’s Cyber Monday Sale valued at $USD 7.9Bn last year, was trumped by T-mall in the first 15 seconds of 11.11’s opening. CIC’s neophyte T-Mall franchise store roughly averaging monthly Tuna sales of RMB 75K, clocked an astounding RMB 89K in one-day, marking the highest sales ever since we joined the platform in March this year.

E-Commerce and Retail have merged to create a seamless shopping experience all the way down to the last mile delivery and after-sales customer service. Almost everything in China is now at arm’s reach. With Taobao, one can purchase plants, live pets, cars, you name it…all delivered to your doorstep. It is therefore key for any Brand owner to have a deep understanding of this new Path-to-Purchase as well as the digital ecosystem that forms the backbone of this channel.

Off-line, the shelves are festooned with countless brands and products, both local and imported. The Modern Chinese consumer is spoiled for choice and explains why they are some of the most sophisticated shoppers in the world. In the canned tuna category alone, I have counted more than fifteen players all vying for the Chinese consumer’s wallet. To say that competition in this market is fierce, is an understatement.

Welcome to new China, unpredictable, fast-evolving and hyper-competitive.

Rewind to March 2018. I arrived on the mainland, unable to clearly communicate, armed with pieces of advice from my predecessor and alone (my family would follow 5 months later). The little “intel” I gathered, was based on financial reports and feedback regarding infamous personalities who lorded over the organization.

I took a long hard look at the roadmap I had inherited. I could barely reconcile the ambition with the current organization capability and resources. I therefore took stock of the key financial challenges: diminishing cash, operating expenses devouring gross profit and contracting volume. Clear indicators that the company was on a downward spiral.

On the HR front, I was pitted against forty employees averaging fourteen years tenure. Who in their right mind would take orders from a newbie “Wai Guo Ren” boss? I felt like the last emperor, who was kept in the dark about affairs while his trusted servants pillaged and plundered the royal granaries. At this point, I took the easy way out and proposed that CIC be fully turned over to a National distributor. As it turned out, my recommendation was not entirely shelved, but slightly modified to re-building the organization with the mandate to break even.

However, I just could not see the light at the end of the tunnel. I was desperate for help and panicked to a point where I was ready to throw-in the towel. There were just too many fires to simultaneously put-out and literally alarm bells sounding-off every day. At some point, it felt rather strange when there would be intervals of calm. That’s when I knew to expect certain people would bring trouble my way. Sleepless nights and anxiety attacks were the norm.

It was against this backdrop that my mental health began to take a toll and I just had to muster the will and determination to see the job through. I made the reasons crystal clear in my head and continued to playback why I took on this hardship post while having to bring my family to this unforgiving place.

First, the vision of our founder to make Century successful in China and second, a feeling of immense gratitude to the Executive committee for taking me back at a low point in my career. Humility is indeed a great teacher.

With my paradigm shift toward this ailing business and rough environment, I rolled-up my sleeves and literally embraced the challenge; a smaller organization delivering break-even. I had taken much inspiration from the watching movies like “The Martian” and “Lone Survivor”. Story lines where the protagonist goes through extreme struggle and eventually triumphs. The typical man vs. environment coupled with deus ex machina. Their plots had solidified my resolve to turn this business around.

“The only easy day was yesterday” is the Navy seal motto and now mine as well. I realized that in order to win the battle I had to know the terrain, utilize external allies and call for back-up.

I began to enroll in various classes that helped me speak the language, familiarize myself with the Chinese business setting and understand the basics of the digital ecosystem. I got the company into the Shanghai chapter of the Philippine Chamber of Commerce to expand my local network and compensate for my lack of the market trend reports.

As soon as the bulk of the organization had been severed, I immediately focused on fixing operational problems one at a time. In so doing, it allowed me to plug the minor leaks while working on the bigger challenges such as; people, pricing control, re-building distribution, supply chain efficiency and laying the foundation for an e-commerce capability to name a few. All these while pushing the remaining sales team to deliver the volumes.

I made many mistakes along the way and I have learned from each failure. In China, knowing who to trust is key, but many times despite due diligence you end up trusting your gut and still make the wrong call. These calculated risks have resulted to lost resources, but again, all part of navigating the business landscape and learning experience.

To become successful in this role, one must be able to adapt quickly, bounce back from setbacks and just keep going. This hyper-competitive market waits for no one. A high-level expat friend summed up his China experience in one phrase that has stuck: “This place is the killing fields”.

Fast forward to November 2019. The organization is entering the norming stage. Financial indicators show signs of recovery. Our Tmall store has reached all provinces and the Century brand has been placed in the hands of consumers across all city tiers. To compliment this effort, we are re-establishing presence in off-line channels and gaining preferred brand status of key global chains: KFC, Starbucks and Domino’s.

Today, it is still too early to claim victory, but I can say boldly that we are no longer spiraling out of control and the plane is slowly heading in the direction of sustainable break-even.

While the aforementioned does appear to have been a lot of work, I must give due credit to the Supply Chain and HR consultants who helped the company transition to where it is today. A foreigner making swift and drastic changes needs back-up to keep the remaining staff motivated and under control. Headquarter support also played a crucial role providing strategic guidance and served as my sounding board to share micro victories or vent daily challenges.

Together, we have made many changes, starting with the people by infusing the right talent, followed by scrutinizing operations and fixed costs then taking necessary actions as quickly as was legally possible.

Having gone through this experience has given me enough wisdom to broadly speak about the China market dynamics and craft a plausible growth plan to sustainably grow our business. Now that we have operations costs under control, it is imperative that the company deploy resources to nurture the B2C channel and in so doing, not only ensure our brands resonate with the modern Chinese consumer but also build long term credibility. Second, re-build B2B presence off-line by going deeper into tier three and four cities. If executed well, I firmly believe both strategies will secure the Century brand will regain pole position, emerge as the top of mind healthy tuna and secure our long-term foothold in this dynamic China market.

-Adrian

11.13.19