Why Having a Competitive Advantage in China is Not Enough


STEVEN: What is something that a local company cannot copy? Just kind of like you said what is something that they cannot take away? And if you can't figure that out, it's a very difficult process in China.

JEFF: Second part there's a second part to that question. How long do your advances last?

STEVEN: That's a very good one, too. Yes.

JEFF: What happened to a lot of companies? Like a lot of the stories that are horror stories are about they went to China. Things for 12 for 3 to 5 years and then we got crushed. You have to know at what point your advantage is going to fade away. Most of them do. And you have to be ready for that. So, Coca-Cola had a very strong advantage for several years based on the fact that in 1980 when they entered 1979 actually. Yeah, they had a unique brand

STEVEN: They have unique product

JEFF: They had money for. And that any product that gave them a very strong advantage. Let say 5 to 10 years. But then Chinese companies started to get money. They started to learn how to make soda. At that point, Their advantage shifted to Chinese to a love of Coca-Cola by Chinese consumers and that is what has protected them ever since. You've going to go to any 7-Eleven in China, and there's a lot of soda but Chinese consumers really do like Coke.


JEFF: So they have a window of opportunity. Look, we're going to come in with a lot of advantages, famous nicknames, a lot of money, relative local food distribution by a deal with Costco. That's going to give us a window of time. And in that window of time. We have to build up a like or love for our product by Chinese consumers such that when the locals come roaring up. We're Okay,


JEFF: And, it worked out well for them. It did not work very well for Danone which came in 1995, but you know various products. And they pretty much got pushed out. Because Chinese consumers are not happy with them. So you get to know what your advantages are and when it's going to go away and you have to have a plan for that which is avenue of new advantage or sell.

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