Competitive strategy

The Chinese market shows all signs of hyper competition, namely dynamics, complexity and evolution. Boundary conditions of the competition are changing fast. The time lags between entrepreneurial actions and reactions are short, and changes of parameters directly lead to new results. Things change and adapt quickly.

Small changes in the complex supplier structure can result in a completely different market development. This complexity makes it difficult for managers to make well-founded decisions. Mental decision models from the West cannot be applied, because they rely on simplified and linear relationships of effects that are not able to comprehend new and context-sensitive situations of decision-making properly.

Defending competitive advantages

In China, competitive advantages often result from the ability to react quickly and determinedly. This especially applies for business areas that are strongly influenced by consumer trends, technological innovations and consolidations. Companies have to pay special attention to the quick renewal of their competitive advantages because in the Chinese market advantages often erode on short notice. The process of eroding is much faster than in dull and stable markets.

Dynamic competitive strategies take effect here. Instead of building an apparently uncatchable static advantage, they create learning and flexible organizations that are unremittingly seeking for new sources of advantages. Companies permanently reinvent themselves and upgrade resources and positions, preventing their competitors to undermine their activities at the same time.

Dynamic competitive strategy

A dynamic strategy has to make sure to exploit the actual market potential and to generate new products, services, sales channels or business models simultaneously. It is important to build potential for changes permanently. Options of action should be kept open as long as possible in order to switch to the optimal strategy model - even at a later time when a certain scenario clearly becomes apparent.

It is crucial to stay strategically flexible und keep the company manageable on short notice. The potential to navigate must be available permanently. In the Chinese hyper competition, it is not possible to build up this potential in a short-term.

Development of dynamic competitive strategies

In order to develop an effective and dynamic competitive strategy, Western managers have to identify the Chinese arena of competition as well as the conditions to generate new competitive advantages. They have to be able to anticipate opposing steps, know the own options in the competition and analyze the possible effects of a chosen strategy.

Today the effectiveness of a chosen strategy in many Chinese markets will not be determined by the first step and central settings, but primarily by the ability of the company to anticipate and respond to new customer expectations timely as well as to the actions and reactions of competitors.

The success of a strategy depends on how competent a company can respond to the changes within a dynamic competitive environment. In China, this environment includes at least new regulations, innovative technologies, changing demands from customers and new emerging competitors - also the counterfeiters.