The battle for China's good-enough market
September 01, 2007
Harvard Business Review
The Idea in Brief
Between now and 2030, China will account for one-third of the world’s GDP growth. Yet many multinationals are losing share in this critical market. That’s because local businesses are targeting China’s ballooning cohort of midlevel consumers with reliable, low-cost products that are displacing multinationals’ premium offerings. And the regional upstarts making these “good enough” products plan to use the same strategy to challenge incumbents in other emerging markets.
To defend your China position and prevent local competitors from becoming global threats, say Gadiesh, Leung, and Vestring, consider entering China’s good-enough space. For instance, attack the competition from above by lowering your costs and distributing simplified, reasonable-quality offerings. If you can’t reduce your costs quickly, use acquisitions to gain a toehold in this space.
By managing the risks and opportunities inherent in China’s middle market, you’ll claim your share of this pivotal market. And you’ll strengthen your competitive position elsewhere around the globe.
Read the full article on Harvard Business Online.