Gaining toehold in Chinese marketplace
The Arizona Republic
May. 6, 2006

Firms looking to get into the market early

Candace S. Hughes
Justine Ji, 32, traveled from China to be an intern at Phoenix-based Avnet because her uncle once helped the technology company establish an e-commerce Web site for Chinese electrical engineers.

That is the kind of connection that NPR's Marketplace host Kai Ryssdal says will be imperative for executives who want to do business in the rapidly changing country.

"Everybody wants in on China," Ryssdal said of a country that represents one of the world's largest, and largely untapped, consumer markets. Ji, who will be an Avnet intern through June, agrees, "Everybody wants a piece of the pie that is China."

Ryssdal was in the Valley last week to lecture at the Arizona Historical Society in Tempe on "China: An Emerging Market Power."

His National Public Radio program transmitted live broadcasts from China for two weeks this year, examining the potential impact of China on the world economy.

Ryssdal said companies whose leaders know how to provide customer service might be able to rise rapidly in the Chinese economy.

For example, Ryssdal, who was a foreign diplomat with the State Department in China in the 1990s, followed a vegetable stand owner's process in growing her business. He frequented the stand to select fresh vegetables, a rare commodity in Beijing.

When NPR went there in January, he sought out the woman to see how her business had progressed in the eight years since he had lived there.
Ryssdal's entrepreneur had expanded her business to nine stores through marketing, branding and customer service. She now has 700 employees and $1 million annually in business.

"(She) knew how to find fresh vegetables requested by her customers and have them there when the buyer returned," he explained.

As more Chinese people become educated, China will be the new hot spot for outsourced knowledge-based jobs, not just India, Ryssdal predicted.

In one of his shows from China, Ryssdal interviewed a 24-year-old businesswoman and followed her and friends to a karaoke bar.

Although Ji didn't hear Ryssdal's programs, she agreed that many Chinese women are rising through the ranks of the rapidly expanding economy.

She is an example of the new generation of Chinese business leaders. She earned her master's in business administration from the International School of Management in Paris and has worked in advertising and editorial executive posts at China Information World. She also was executive vice president of the Hanzhong Printing Ltd.

Ryssdal also noted that it will be important to learn other languages and customs and to know there are different ways of viewing the world.

Ji agreed and pointed out how she is learning Western manners.

When Ji first came to Avnet, she said she wanted to hold the door for Jan Jurcy, vice president of public relations, because Jurcy was older and a superior, but Jurcy wanted to hold the door for Ji because she was a guest.

"We were running for the door all the time at the beginning," Ji said, laughing.

Avnet, which has 2,200 of its 11,000 employees in Phoenix and ranks 58th on The Arizona Republic's list of 100 largest employers, entered China in 2000 when it bought a China-based distribution company with 20 offices and a number of warehouses in China.

"Today, Avnet's revenue generated from business in China is about $1.5 billion of the company's $14 billion annually," Jurcy said. "The reason our company has expanded globally is so we can serve our customers and suppliers who manufacture in lower cost regions."

The ChinaECNet Web site was created with Justine's uncle.

"Her uncle is highly placed in the Chinese government and several years ago was involved in helping Avnet establish the e-commerce Web site for Chinese electrical engineers responsible for designing electronic products and ordering parts used to build them," Jurcy said.

In exchange, the uncle, an officer in the Ministry of Information Industry, requested that Ji spend a few months with Avnet and become an active member of communications and marketing activities for the Phoenix company.

"She was to be in our executive training classes so she can be educated in Western practices," Jurcy said.

Cultural differences between East and West can be subtle and misinterpreted.

"If someone says something to me in a business meeting, I might just keep quiet and think to myself that I agree or disagree," Ji said.

But Ryssdal had a different take. He said that the Chinese are too frightened to speak up when they disagree. "It's difficult to elicit true personal opinions where there is personal risk," he said.

Ryssdal said China is changing from the top down, but business leaders should be aware that there still were 70,000 incidents of civil unrest in 2005. He said the neighborhood where he lived as a diplomat and the vegetable stand had been was erased by the government to make room for a five-star hotel.

The residents were moved 18 miles outside Beijing.

"The only constant in China today is change," he said of the country he calls "the wild, wild East."

"Businesses who want to get into China must keep in advance of the rapid change."

During Ryssdal's visit to Arizona, the Marketplace show, which airs at 6 p.m. on KJZZ-FM (91.5), was produced from the Tempe studio of Rio Salado Community College.


Subscribe to The Arizona Republic today and receive 20% off the newsstand rate plus a $20 Target GiftCard!