BtoB

Special Report: Knocking down the Great Wall

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A stroll through Beijing's streets tells us that U.S. involvement in China's economic revolution has been, to the naked eye, mostly a consumer one. Marlboro and KFC billboards are nearly as ubiquitous in the Chinese capital today as bicycles and Mao suits were before the 1970s, when the country first opened its doors to foreign investment after decades of isolation. B-to-b marketers, uncertain how to target China's nascent entrepreneurial class, have mostly sat out the boom.

Recent ventures by b-to-b companies, however, show that they are beginning to take the market seriously. U.S. giants such as Intel Corp. and Oracle Corp. are launching Chinese b-to-b projects, as are a swarm of start-ups such as HelloAsia.com and Sina.com. And other companies that are inseparable from the b-to-b revolution-VerticalNet Inc., for one-also are considering entering China.

Everyone's after the same thing: money, and lots of it. Selling just a few thousand trading platforms, servers or software systems can set the groundwork for terrific profits when China's economy finally explodes.

In reality, China's regulatory roadblocks and day-to-day business complexities can hobble even the mightiest of U.S. companies-witness Ford Motor Co.'s ongoing travails. B-to-b tech marketers, most of which do not have the cash, legal expertise or connections of a BigThree giant, will have no easier go of it.

Chinese challenges

Upon entering China, b-to-b marketers face political uncertainties and the nation's lack of cash and good technology infrastructure.

More than 140 national laws govern foreign investment in the country, plus thousands more in each province. Upcoming elections in 2002, and the impending retirement of President Jiang Zemin, cloud the scene further. And legislation being floated by the National People's Congress threatens to stymie Internet and telecom commerce in particular. In China, where government bureaucrats are involved with the business process at every turn, understanding the political scene is not a high-minded task, but an absolute necessity.

China's weak technology infrastructure makes b-to-b e-commerce difficult, at best. And many of its companies cannot afford pricey Internet technologies anyway. "If you come here with the ideas of an Ariba or a Commerce One, you'll find that the backbone doesn't exist for your products," said Kevin Painter, founder of Neptus Group, a Hong Kong-based b-to-b platform developer and consultancy. "Plus, the players here won't be able to afford your solution. You need to modify your approach."

And while cash infusions from China-centric, U.S.-based venture capital firms such as Chengwei Ventures will help spur b-to-b investment in the country, major spending is not expected to happen soon.

Mainland marketing

China's unique challenges make sound marketing especially important. And experts say that hiring local partners and salespeople is the cornerstone of any integrated marketing strategy. "Most people make the arrogant mistake that they can parachute in and out," said Chih Cheung, CEO of Redwood City, Calif.-based HelloAsia Corp., a b-to-b marketing company that focuses on China. "To be successful on the mainland, you've got to establish a presence and make relationships. You need a local partner, not [just] someone from the U.S. who understands technology."

Internet and e-mail marketing are perhaps the most strategic way to reach China's b-to-b audience, he said. Since they have not yet taken off, he said, the novelty factor still exists.

Intel is currently launching one of the most ambitious Chinese projects by a U.S. tech marketer to date. The company recently signed a broad-reaching pact with Beijing Telecom to provide b-to-b Web hosting services to both mainland corporations and non-Chinese companies looking to set up an Internet presence in the country. Given the state of China's enterprise technology infrastructure, the chip giant faces a long wait before any real payoff begins.

"We see it as a long-term proposition," said Rob Karmele, marketing director, Intel Online Services. "It's about getting in on the ground floor. We want to facilitate growth of the Internet in China."

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