How could Baidu win over Google in China? Professor Wong Poh Kam from National University of Singapore argued at the first boot camp, that Baidu developed a better search engine for Chinese words and signs, while Google missed to adapt their search engine to the Chinese language.
Professor Wong also pointed out that the Chinese companies are not content with their existing position in low-end. They will strive to move upwards to mid- and high-end markets and be direct competitors to Danish companies in China. Therefore, Danish companies should create competitive advantage through innovation of their business models in China in three ways: a) enabling cost reduction, b) enabling differentiation of quality/attributes of products/services delivered and c) raising barriers to entry.
There are three main characteristics of Chinese companies: fast in learning, rapid experimentation and product variety. When competing in the Chinese market, Danish companies need to understand why some Chinese are better or cheaper. They must ask: Is their business model sustainable or are they just selling at low prices to drive you out of business? To find the weak spots of the Chinese competitors, it’s necessary to understand their real business model.
Professor Wong also introduced the ShanZhai phenomenon. With open innovation and modular platforms the world is one big resource that can develop and make new products at high speed. Modularity is fundamental for low cost production, so if your product is too modular there is a risk of low cost competition. Adding complexity to the product is a way of reducing competition from low cost competition.
Finally, Professor Wong suggested all the participating companies to:
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