With 1.3 billion customers and rising incomes, China is a dream market for world business. But for most of these businesses, it will remain a dream until they develop and apply a new concept of strategic planning, comconsumerism, which combines and compromises consumer-value-oriented strategic planning with community-oriented planning, that is, provide for both consumer and community needs and well-being.
To grasp this new concept of strategic planning, corporate planners must understand the very nature of China´s emerging economy, a cocktail of capitalism and socialism, whereby the government continues to hold on to a crucial resource, i.e., land. The Chinese government is developing and managing land through State Owned Enterprises (SOEs) and Town Village Enterprises (TVEs) or by leasing it to private companies and joint ventures. In either case, business organizations operate under community-based strategic planning that begins with the available means and resources, and proceeds with the ways, and the ends, i.e., the satisfaction of the community needs.
This sort of planning that places the community at the center of the economic universe is effective. It allows business organizations to nurture and develop resource-based capabilities and achieve certain social objectives, but is inefficient. It turns Chinese business organizations into welfare agencies rather than true business enterprises, putting the cart ahead of the horse and wasting resources in producing commodities that add little value to consumers. Resource-based competitive advantages are further easy to be replicated and copied by the competition and are often followed by price destruction, profit erosion, and trade friction.
Community-oriented strategic planning is sharply different than customer- oriented strategic planning prevailing in market economies, whereby most resources, including land, are owned by private parties, and business organizations. Customer-oriented strategic planning begins with goals and objectives, i.e., the satisfaction of private needs and proceeds with the allocation of resources to reach them
This sort of strategic planning process which places the consumer at the center of the economic universe is efficient. It allocates resources to produce what consumers want and delivers it when and where they need it. But it isn´t an effective process. It doesn´t nurture or develop resource-based capabilities; and it doesn´t provide for certain social needs, e.g., the education, the health, and the natural environment of the community, at least not in the form of a budget that allocates the funds to address these needs.
As has been the case with most overseas markets, business strategists tend to approach the Chinese market with a customer-oriented mindset that focuses on Chinese people´s private needs. This means that they prepare and launch products that improve the lives of people as consumers, but not as users of the commons. This approach conflicts and contradicts with the community-based mindset prevailing in China, and is often the source of failure even for foreign brand names. What´s the solution?
Comconsumer-oriented strategic planning, a new form of planning that combines and compromises the two types of planning by matching the internal capabilities of business organizations with the emerging consumer as well as community needs. This kind of planning begins with goals and objectives that deliver consumer value and proceeds with the development of the appropriate ways and the required means to reach certain community ends and eventually delivering consumer value.
Placing both the consumer and the community at the center of the economic universe, comconsumer-oriented strategic planning is both effective and efficient. It is effective because it allows business organizations to develop resource-based capabilities and reach certain private and social objectives. It is efficient because resource allocation is demand- rather than supply-driven. Corporations provide the goods and services consumers, rather than government bureaucrats, value the most.
The understanding and implementation of a comconsumer-oriented strategic planning requires a new mindset, which focuses on bundles of private and social goods and services, providing thereby both for the consumer and the community needs of a target group, and nurturing close ties with local governments. Companies that sell TV sets in a Chinese prefecture, for instance, must budget sufficient funds into their plans for addressing the community needs of the prefecture rather than just paying taxes or contributing to charity from the profits they earn from the sale of their products.