Short-Term Results: The Litmus Test for Success in China – article by Rick Van - blog by Karl Janowski
This article was published in Harvard Business Review.
Companies take the long term-approach too far.Long-term results are best achieved through several measurable short-term gains.
Equity joint ventures – more managerial power
Cooperative joint ventures – less managerial power
Coke Story
When Coke started in China, it was not well received. Coke took control of its joint ventures by gaining majority equity when Pepsi still had cooperative joint ventures. Coke’s plan was simple: direct distribution. It worked. Early success reinforced long-term commitment. Now Coke is way ahead of Pepsi in China.
Patience and Longevity aren’t enough
Early moving is not as important as managerial capacity, critical mass scale, and product portfolio
Kraft has had a harder time succeeding than Nestle who introduced both global brands and products tailored for the Chinese such as Chinese flavored instant noodles.
Diving in and treading water can be just as expensive as getting in late
Aiming short term allows you to learn and adapt, plan to have some failures
Short-term success is the best litmus test for long-term success