Shanghai Post!

This post comes from Shanghai in China, I have been here (in Nanjing) for the past 7 weeks on a short teaching assignment. I teach international business (marketing and finance). I always find the differences between our thinking (in the West) and the Asian thinking towards  a business approach very interesting and the subject of much debate.

For example you can go into almost any store (except the larger department stores) and bargain for most things that you want to buy. Whereas if you tried to do this in say, Australia where I live,  you would be laughed out of the shop! But here in China it is a way of life!

This culture of discounting even extends to my students here in China. For example whenever I give them an assignment (usually in groups) on marketing, where they have to research possible export markets for Chinese products (example, electric motor scooters), they always have their number one strategy as ‘discounting!’

I always quiz them on this and try to explain, that they have learned all about marketing (in the subject course), they know all about the importance of the 4 P’s of marketing, the product life cycle, and how to create a demand. Yet they still have the culture (or mentality) of discounting.

I then explain to them (after each of their group presentations) that if our intention was always to discount then there is not much point in wasting our time on too much marketing or research. This of course is counter-productive as the whole point of marketing is about ‘perception’, getting the consumers (your target market) to perceive that they are getting the best value. for the best product on the market!

How do you do this? By undertaking a marketing audit, which includes research, understanding your target market and most importantly market testing and then developing a promotional strategy. If you discount after doing all this hard work then you have:

1. Wasted your time.
2. Left dollars on the table.
3. Possibly prevented any future price increases.
4. Damaged your reputation irreparably.
5. Seriously affected your company’s profitability.

So getting the message across to my Chinese students is sometimes a long and difficult process, because it is ingrained in the culture here. Once I convince the current students I am teaching, I still have to do it all again when I return to China for the next round of teaching!

Well at least I am doing my bit for the economy here! Having said that, China still continues to make most of the world’s products much cheaper than any other country. A fact my students remind me of when I sit them down and explain my anti-discounting theory to them.. . . hmmm??