How Microsoft Conquered China

In the CNN Money July issue, it featured an article “How Microsoft conquered China”. In this article, the senior editor David Kirkpartick discussed the story how Microsoft gain its success in China in the past couple decades. For sure it was not an easy task. Microsoft tried to use the business model in China they used everywhere else but they failed miserably. They had to deal with different business customs, intellectual properties rights, government regulations and such. These are common problems that businesses have to deal with nowadays doing business with China.

Intellectual properties rights are one of the most concerned issues when it comes to business with China. ‘As Ya-Qin Zhang, who heads Microsoft’s Chinese R&D, puts it: “In China we didn’t have problems with market share. The issue is how do we translate that into revenue.”’ The problem is not that Chinese do not like to use branded products; Chinese would rather look at the dollar value. Because of that, counterfeit products are very popular. In order to solve the problem, most companies would try to take it to court but most usually result in failure. Microsoft started work with the Chinese government after legal approach has failed on them. “If a foreign company’s strategy matches with the government’s development agenda, the government will support you, even if they don’t like you.”

It is a very different game play when is comes to doing business in China. The Chinese have a unique way of doing business. Without basic understanding, billions of dollars can be lost. “It took Microsoft 15 years and billions of dollars of lost revenues to learn how to do business in China” Kirkpartick quoted Sigurd Leung in the article. Microsoft might be able to afford losing billions of dollars but most small and medium size businesses cannot afford that. Microsoft served as a very good example why research about a new market is so important.

Full article: http://money.cnn.com/magazines/fortune/fortune_archive/2007/07/23/100134488/index.htm