Rendering

Текст № 6

Scan the text and say what lessons global companies should learn from doing business in hyper-growth emerging markets.

TO SUCCEED IN CHINA COMPANIES NEED TO BE ADAPTABLE

Are China’s recent actions in trade and exchange rate policy putting global companies on a more competitive footing? That is an open question. Most companies that have tried to compete within China in the past 15 years have had a rude awakening and have had to rethink their business strategy – not just in China but around the globe. Hyper-growth markets such as China are changing the rules of the game and it pays to know what the new rules are.

For starters, companies that have been accustomed to applying existing products and processes to win in new markets are finding that this model does not necessarily work in China. They are also discarding the notion that billion consumers necessarily mean billions in profits – call it the “toothpaste syndrome”. While it is true that 1bn Chinese need toothbrushes, the Chinese can easily produce their own and at substantially less expense than global competitors. But what about products in which global companies can carve out a competitive advantage?

Consider China’s fledgling motor industry. Fifteen years ago, Japanese motorcycle makers dominated this market. Since then, entrepreneurial Chinese companies have offered comparable models at a fraction of the cost. A few years ago they were offering motorcycles for $700, compared with Japanese models costing 30 per cent more. Today, the Chinese offer comparable models for less than $200 (€166), which has helped them grab one-third of the world market. Most of these gains have been made with Asian and African consumers, who are not only price-sensitive but choosy and brand resistant – a perfect environment for fledgling emerging marketers.

How do you produce a motorcycle for less than $200? You invent a modular component production system that draws on a network of local suppliers, enabling you to assemble motorcycles in record time with a range of variations to meet local tastes. Compared with Japan’s vertically integrated production systems, China’s modular systems are not only leaner on inventory and highly flexible to meet local demand but much cheaper to operate. Will this kind of modularity replace less flexible, vertically integrated systems in other industries? Manufacturers are scrambling to find out.

Another sector being turned on its head in emerging markets is the mobile phone industry. After years of being beaten by domestic mobile phone makers in China, global competitors are fighting back and winning. Nokia, the global leader, has adopted the same low-cost, large-scale production model favoured by domestic producers and made China one of its five major hubs for research and development and distribution. They have also copied domestic marketers by offering consumers attractive new models and low prices. The result: Nokia had sales in China of €2.7bn in 2004 – an increase of 32 per cent over 2003 – and became he largest exporter of Chinese-made handsets to the rest of the world.

Or consider the learning curve of SABMiller, the global brewer, which entered China in mid-90-s – one of more than 500 local brewers and a growing number of global competitors. The company quickly discovered there was a limited market for its premium-price brand and was eager to expand into China’s mass market for lower price beers – the largest in the world in volume. So it started snapping up leading low price regional and local brewers, building a diversified portfolio of low, medium and high-priced brands. Their acquisition strategy focused on a few clear targets: low-cost providers, deep local management expertise and strong ties to local governments to ease licensing and red tape. As other brewers faltered and exited China, SABMiller’s business there has flourished, including growing market share for a leading regional brand from 7.5 per cent to 41 per cent in a single year.

The lesson for global companies entering China’s treacherous but potentially highly rewarding market could not be clearer – rethink existing assumptions and start innovating around fundamental business processes, including product pricing, how you go to the market and, most important, how you can become partners with local suppliers, researchers and distributors to become cost-competitive. You can succeed in the world’s fastest growing market but only if you learn new ways of doing business. Moreover, you may find that you have learnt in China will help you grow in other markets around the world.

The Financial Times, September 30^th, 2005

ACTIVE VOCABULARY

1. to discard – отвергать, отказываться, списывать в утиль, выбросить за ненадобностью

2. to carve out – отхватить, урвать (долю рынка)

3. fledgling – начинающий, неопытный

4. price-sensitive – чувствительный к изменению цен

5. brand – известная торговая марка, фирменный знак, бренд

6. inventory – товарно-материальные запасы

7. lean – рациональный, оптимальный, экономичный, бережливый

8. flexible – гибкий, переналаживаемый

9. hub - центр

10. expertise – профессиональные знания, практический опыт, техническая документация

11. red tape – бюрократическая волокита

12. to falter – колебаться, ослабевать

13. to flourish – процветать, преуспевать

14. to distribute – распределять, сбывать, продавать

Paraphrase or explain the following in English:

• to put somebody on a more competitive footing

• it pays to know

• to discard the notion

• to carve out a competitive advantage

• fledgling industry

• price-sensitive and brand-resistant consumers

• vertically integrated production system

• to be lean on inventory

• the learning curve

• mass market

• to build a diversified portfolio of brands

• treacherous but potentially highly rewarding market

Suggest the Russian for the following:

exchange rate policy, a global company, to rethink business strategy, to produce something at less expense, a competitive advantage, to dominate the market, to grab the market share, price-sensitive consumers, fledgling emerging markets, to draw on a network of local suppliers, a flexible production system, to meet local demand, premium-price brand, to expand into mass market, the acquisition strategy, deep local management expertise, to ease licensing and red tape.

Text № 7