One simple way to compete with Chinese companies

Chinese firms are a force to be reckoned with. The Economic Policy Institute estimates that between 2001 and 2011 Chinese firms caused the loss of 2.1 million manufacturing jobs in the United States. Whilst this trend can seem intimidating for many mangers, it is possible to compete long term by addressing key weaknesses in Chinese companies’ operating style. This article outlines two key principles which will help you to beat Chinese competitors in any industry and ensure that your market share grows steadily over time.

Compete by Cultivating Customer Loyalty

Many Chinese companies are used to treating their customers poorly, preferring to switch industries and develop new prospects rather than develop customer service. Chinese businesses often shun the prospect of retaining a '回头客’ or faithful customer and typically focus resources on increasing production. This tendency stems in part from the short term mentality prevalent in China. This emphasizes short term gain and placing trust in family members and neighbors rather than strangers. The saying ‘富不过过副’ translates roughly as three generations cannot be wealthy and reflects the limited life span of many family owned companies.

In order to differentiate yourself from Chinese competitors, you should leverage product quality so as to encourage customers to keep on returning to you. This could take the form of periodic reviews of product quality. It may also include improved customer service: offering a hotline for inquiries or submitting regular feedback forms to customers. While these activities do involve an investment, they can yield significant benefits in the long term and truly set you apart from Chinese competitors.

Lesson 1: Build customer loyalty in the short term and you will remain a market leader.

Compete by Reducing Marketing Costs

Chinese companies typically spend a lot of resources on locating new customers. However, this requires considerable cost. In addition to the cost of printing flyers, placing ads and employing and training marketing staff, business development often distracts business owners from the core business operations that contribute to revenue. By cultivating customer loyalty it is possible to encourage word of mouth marketing. As satisfied customers purchase your product they can tell others, who in turn will promote its benefits. This can create an upward spiral which will enable you to put distance between your company and your Chinese competitors.

A side benefit of this approach is that, as you reduce marketing overhead it may be possible to reduce marketing costs. These cost savings may be passed on elsewhere and enable you to remain competitive on the cost front.

Lesson 2: Find ways to reduce your marketing budget and pass on the savings to your loyal customers.

The Implication for Your Business

The key implication of these practices for your business is that you need to focus on providing excellent customer service and adopting a long term approach. Although Chinese companies are proficient at manufacturing items at low cost, it is possible to remain competitive by reducing marketing overhead and emphasizing quality. By continually investing the additional profits from both of these areas back into product improvement it is possible to increase your long term market share.

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