Look the other way: Is ignoring the competition
in China really the key to success?
To ignore or not to ignore. If that’s the question, what is the answer? Let’s
look at both sides of the argument and understand where the company in
China should stand on what is both an important but often divisive issue. Is
there a middle path through all this, and if so what does it look like in practical
Three reasons to ignore your competition
Okay, here are your reasons to look the other way entirely when it comes to the competition.
1. Your resources are limited, so why waste them on others?
Thinking about competitors, endlessly researching them, making spreadsheet after spreadsheet takes up a lot of time, especially when there are a lot of them. Take marketing technology as an example. If your startup in China is looking to bag some market share here, then you probably can’t even keep up with the number of competitors given the phenomenal pace at which landscape is growing. You would need to hire someone full-time just to keep up. All that time spent monitoring your foes could be better spent elsewhere, such as on the things any competitive analysis will probably tell you to improve anyway. Make your product more reliable. Diversify your brand. Train your team. Improve your customer service or produce a new marketing and advertising campaign that really talks the talk.
2. Focus on customers not competitors.
This is intrinsically linked to having limited resources, but it’s worth making the distinction. The bulk of a company’s focus should be on the target customer base in China. If you’re not sure who that is, making research should be a top priority. If the market is already so saturated that you’re struggling to be heard, focus on what your customers want, or will want, as well as how and where they are accessing their information. By putting your limited time and resources into your customer base, you’re automatically focusing on your product and learning about competitors on the sly anyway.
3. Copycat problems.
Companies in China are meant to be innovative. By definition that means creating something different, something new – something that reshapes the market landscape. But too many times I see companies that simply refine another company’s product. In an over-crowded market this problem could get even worse. Suddenly you’re trying to improve on everyone’s offering, causing your product to become a mishmash of ideas. So create new demand. Hold on to that original big idea, because by coming up with it, you saw that gap in China and probably analyzed the competition anyway.
Ignore them at your peril
Now let’s flip it and look at why you shouldn’t take your eyes off your competition.
1. You may need to react.
Imagine you ignore the competition because of the reasons above. But a month before you’re about to launch that new product or service, a competitor beats you to it. Disaster! The reality is that times have changed. Maybe ignoring the competition was fine advice a decade ago, but with technology driving change at a pace never seen before in human history, companies in China can’t afford not to follow their competitors, at least to some extent. By keeping a fleeting eye on your direct competitors, you can react before they do, or at the very least be ready to respond.
Who are your direct competitors? Well, when starting out they are unlikely to be on a par with Apple and Microsoft. Whatever you may have heard, thinking too big at the beginning is a mistake. Airbnb didn’t start out trying to take market share from hotels: Joe Gebbia and Brian Chesky started by giving designers a chance to rent a sleeping mat in their loft and threw breakfast in as part of the deal. It spiralled because the idea was innovative, and competitors limited. So keep an eye on those competitors solving the same problem or vying for the same dollar as you. Don’t obsess about them, just be aware.
2. Learn from their mistakes.
Even if your product is set to reshape the marketplace in China and has no immediate rivals, there are still some overlaps between your business and indirect competitors. You both probably have a website, maybe an app, for example. Learn from the failures and successes of others. What keywords do they use to be top of an internet search (Google Alerts is a great tool for keeping on top of this)? What content do they have that attracts a lot of internet traffic? And perhaps more importantly, learn from their failures too – because the risk of this happening in our globalized marketplace is only increasing. So have a look at some of the more recent failures in your sector. Where did they go wrong? Did they grow too fast? Did they try to diversify too much and forget their core audience? Whatever their mistakes, take heed of them so you can avoid the same pitfalls.
3. Your competitors are on the inside.
At more and more companies, it’s becoming increasingly common that new companies (and potential competitors) are formed by employees who think they can do a job better than the in-house team. It’s hard to ignore these rivals, and there is a strong chance of having to work with them at some point down the line. Then there’s the guy on the desk next to you or down the corridor. Co-working spaces or tech hubs, such as Wework or Naked Hub, frequently bunch startup businesses together. What are the chances that a competitor is sharing the same coffee machine? Or that you’ll bump into them at a conference? In all these cases, it’s important to understand whether they are a threat to your business or in fact a potential future collaborator that could add real value.
Finding the balance
Ultimately, your situation is unique, so start by knowing your business inside out in China; that way you’ll be aware whether a bit of competitor knowledge will be a help or hindrance. This is especially true if the Chinese market is already crowded. No business can operate in a bubble, but don’t let the competition dominate your vision or relationship to customers. Just put your head up every so often to take in that bigger picture. And after all, finding this sweet spot will put you a long way ahead of – you guessed it – your competitors.
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DISCLAIMER: All information in this article is verified to the best of our ability and is assumed to be correct at time of release; however, Woodburn Accountants & Advisors does not accept responsibility for any losses arising from reliance on the information provided within. The information provided is for general guidance and does not replace specialized advice.