This is the first installment of a new ``Doing Business in China: Learning from Mistakes’’ series. China is South Korea’s largest trading partner. Many Korean businesses are present in China. In this series, we asked successful CEOs to share one business mistake they made in China and how they improved on it. ― ED.
By Sunny Lee
BEIJING — “Do unto others as you would have them do unto you” is the Christian “golden rule,” as shown in the Bible. The “Western” rule may not always work in China. And Park Keun-tae, president and CEO of CJ Group’s China unit, learned it the hard way.
CJ, a food and retail giant in Korea, accounts for a whopping 80 percent of the Korean market with its popular beef-flavored “Dashida” bouillon powder.
About 10 years ago, CJ eyed the Chinese market, the new global economic magnet, just like many other global companies.
“There are many Koreans living in China. And there are many Korean-Chinese as well. So, we thought the beef-flavored Dashida would sell well there,” said Park in an interview with The Korea Times in his office.
“But later, we found out that more than 90 percent of the soup base in China was based on chicken flavor.”
In late 2006, CJ launched a new chicken-based Dashida, specifically designed for Chinese consumers’ tastes. It became an instant hit. In just two years, CJ’s Dashida took up 30 percent of the market.
“We used to be at the bottom (in market share). But after this change, we soon became the number two player in the greater Beijing area.”
The experience was a very good lesson for Park. “To be frank, we didn’t understand the Chinese dietary culture. We thought we were all Asians and there is one Asian culture. But in reality, the dietary culture in Korea and that of China were different.”
“Localization” has been a mantra of modern business practice. It means when you do business in China, the barometer should be the local people. You should adjust your product according to the needs of local people. But the confessional story by Park, a veteran in China, who spent over 25 years here, reveals that it’s easier said than done.
For example, it was not Park or any other Koreans who brought up the idea of changing Dashida’s eternally popular beef flavor into a chicken flavor. Rather, that was an idea of a Chinese employee.
Some “China hands,” after having been in China for too long, think they now know how Chinese think and what Chinese consumers want. They think they have assimilated into the Chinese culture well. Park says nay.
“That only goes so far,” said Park, warning against over-confidence. “The point is that adjusting yourself to the Chinese market is still not enough. You should let the local people become the judge and make products accordingly, instead of what you think would be good for them.”
That humble attitude and constant attention to the local needs worked for him. CJ has been at the forefront of trailblazing Korean businesses’ effort to explore the vast Chinese market. Now its operations in China range from food, animal feed, TV shopping, and even biotech. In some of these areas, CJ tops the market.
Park, who also heads the Korea Chamber of Commerce in China, advises latecomers to the Chinese market to conduct a thorough market research.
For example, after his company decided to launch the chicken-flavored Dashida in the Chinese market, his company wasn’t in a rush to release it to the market. It took another two years to fine-tune the flavor at its R&D center.
Although the Christian golden rule doesn’t work in China, that doesn’t mean that the Christian teaching is always wrong in China either. Perhaps, it’s a matter of focus. In another part of the Bible’s New Testament, Jesus said: “Not my will, but yours, be done.” In business, that is what is called the customer-oriented service.
“The answer to how to run business in China comes from local people. You should pay attention to their voices,” said Park.