Competing in China’s e-commerce market requires a startup mentality

Xin Wang of Brandeis University International Business School and Z. Justin Ren of Boston University School of Management wrote an interesting article about How to Compete in China’s E-Commerce Market for MIT Sloan Management Review. They analyze why companies like eBay, Groupon, and Google have struggled in China.

They offer advice relevant to both entrepreneurs and large companies: understand your customers, make decisions quickly, and pay attention to your competition. As The Startup Owner’s Manual and The Lean Startup point out, the entrepreneur’s mission is to understand their customers’ needs, test hypotheses by gathering customer feedback, and iterate quickly based on their findings. When doing this, you’ll have to discover how to solve your customers’ problems better than your competitors do. And since you are testing and iterating, you’ll have no choice but to create a culture of quick decision making.

As Blank and Dorf point out, “a startup is a faith-based initiative”. It’s important for large companies entering China, or other new markets, to remember they are also “faith-based initiatives” — even though they are market leaders at home, their approach is unproven in the new market. They need to think like a startup.

When entering a new market, make sure you understand the competitive climate and your target customers’ needs. Then, alter your offering to carve out your own piece of the market. Otherwise you may end up another example of large company hubris leading to failure in a new market.

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  • Ernie

    I think they sound like typical Biz school windbags, telling us what we already know but putting a cute, borrowed new label on it, in this case “faith-based initiative”.

  • Sameer Karim

    Thanks for your comment, Ernie. I didn’t really explain the “faith-based initiative” idea, which may be contributing to your view of it. The main point Blank and Dorf are making with that statement is that startups are, by definition, based on a lot of untested assumptions. I think it’s a concise and appropriate label that reminds founders to state and test those assumptions as soon as possible. If you are inclined, I recommend checking out The Lean Launchpad class Steve Blank is teaching on Udacity. It’s free and, at least in my opinion, well worth the time.