As a seasoned market entry and greenfield strategist and advisor, Sam Goodman helps companies to strategically market themselves across various industries. He has established and built businesses for restaurant, manufacturing, internet and cleantech projects in China and is fluent in English and Mandarin Chinese.
Sam is the author of Where East Eats West: The Street-Smarts Guide to Business in China. As a long-term resident of Beijing, Sam talks about the SME, investment, recruitment and operational landscape to individuals and companies who have interests in China.
Justin: Could you talk a little about yourself?
Sam: After I graduated from University of Western Ontario in 1993, I went as far away from home as I could without coming back around. I lived a year in Hong Kong. With a BA in Psychology, I had no marketable skills in the real world. Therefore I studied to be a fitness instructor. I worked three hours a day and made as much money as my roommate who was an architect.
Then another friend of mine who studied Chinese in Beijing suggested that I should visit the mainland China. I did go and took Mandarin courses in Beijing Culture and Language University. During the study, the eager to enjoy some western food motivated me to run a café, Beijing Sammie’s, which was my first business in China. In five years, I grew Sammie’s to a recognized brand name with five locations in Beijing, 100 staff and annual revenues of US$1M. I systemized the company for franchising and then successfully sold Sammie’s to a leading food company. It was a great experience and gave me a lot of exposure to things I would have not ran into in North America.
Justin: What kind of factors keep you doing business in China after you experienced so much there?
Sam: First of all, doing business anywhere is difficult and challenging. That is also the reason why I wrote the book Where East Eats West. I intended to make it easier for people who just came to China to understand the rookie mistakes.
Back to question. I love challenge. And I think China is absolutely a great place to be in for this generation of entrepreneurs. At here, you can do IT, clean tech, pretty much everything, because China is developing so fast. There are so many opportunities here. I have so far had an incredible 16 years, doing so many things in China, including selling sandwiches, investment, executive recruitment, nuclear power plant negotiations, clean technology, writing a book. And now I am in IT business. So the chance for entrepreneurs like me is to reinvent themselves based upon their passion. If I was back to North America and did not have twenty years experience in doing something, nobody would take me seriously. But in China I can prove myself by doing. There is so much energy to get things down. That’s what captures me here.
Justin: It has been sixteen years since your first entrepreneurship experience in China, do you think the business environment for foreign entrepreneurs has been improved?
Sam: Based on my experience, most of the Chinese are friendly to foreigners. It is not that Chinese are out there to cheat foreigners. Foreigners were cheated sometimes because they are easy targets. Chinese entrepreneurs had as tough a time as foreigners did several years ago. In North America the rules are very clear, what you have to think about is competition. Sixteen years ago in China, the rules were not very clear, but with much less competition. So the challenge was more on how to do business. When I started, there were no Starbucks and only a handful of cafés in Beijing. People were willing to take a 25 to 45 minutes’ drive from downtown all the way to where Beijing Sammie’s was for our great smoothies. The environment has definitely changed a lot, it’s more mature, especially in first-tier cities, with more intense competition. If you want a smoothie, there are tons of different place to choose. There are so much more competition now. It is still a challenging environment, but for different reasons. And to a foreigner walking into China, if you haven’t done your homework, you walk into trouble.
Jackson: How can you tell whether a company is ready for China or not?
Sam: Imagine you are an experienced basketball player. If you see a kid walking into the court, you can tell by his walk, just from experience, that he is not ready for the game. Be it not enough practice, he does not know the rules of the game, does not have skills or has skills that do not work in the environment. Many western companies are very skilled in doing business in their environment. So when they get to China, they are not willing to alter the way of doing business. Some companies quit the Chinese market because they want to do things in the same way back home.
Justin: You mentioned this problem in your book. And you took Chili’s as an example of failure in China. How about some successful cases?
Sam: Chili’s thought they would come to China and blow everybody away with their great food, which was not what Chinese customers were looking for. They were looking for a western experience. And Chili’s was not marketing that. In China, many customers concern more about face. Looking good is the number one motivation. It is also a very powerful motivation in North America, but much less powerful than that in China. Understanding how that affects what you are doing is extremely important. People of Pizza Hut have done an incredible job to adjust their local strategy. In North America, Pizza Hut is not a date location. However, they’ve presented themselves in such great way in China that it is a perfect location where you want to have a party or take young girls to. They are not presenting good quality food so much as presenting “hey, this is a great place for you to take somebody out”. It’s a face issue.
Justin: Could you tell us something about your current business? What is the idea behind it?
Sam: The business I am doing right now is called Fei Chang Hao Kan (in English great to watch). The idea is the next generation marketing platform. We took the very elements of the Groupon model, giving a platform to the brands for free in exchange for something that the masses want. We think that is great. Social media is the key. It’s the engagement where we want to be. We created a contest community which endeavor individuals and brands the ability to create a contest. We basically give that away to them in exchange for prizes opportunities that build buzz. It could be anything from the most beautiful smile, the best man to date with, the most suitable suits for an interview, depending on what you are passionate about. It’s like the next generation of photo sharing, and brands can get involved by sponsoring category or specific contests. We just started our soft launch last week and the actual launch will be in four to six weeks. Our goal is to be the first China originated internet innovation to go global. The purpose is to help people find and share their passion.
Sam: China is a huge market. To perform well in this market is not about resources, it’s about doing something well consistently. Nobody is doing what we are doing. So we need to get out of the gate and capture the mind share of the Chinese population about where you go for the contest. Contest is not new, but a contest community that would earn money is different. We will keep producing outstanding contests with attractive prices. We plan to do four brands. Fei Chang Hao Kan is the first one and three more are coming in the future. The brands are for different market segments. The reason why we are doing this is that getting copied is inevitable here. I bet that our business will be copied in four months after the actual launch. So we basically clone ourselves, trying to beat the competition by staying ahead of the competition. We also have many advisors who are well connected in variety of areas.
Justin: We know that you used to be the advisor and negotiator for Westinghouse Nuclear in doing business with China. How did you act your role during the negotiation?
Sam: The negotiators from Chinese side spoke awesome English. So I was needed not because of my Chinese. My role was the buffer and culture translator in between the two sides. Some twisted situations which could not happen in western business environment did occur often in China. I had to remind Westinghouse of the possibility that things could go wrong and the reasons behind it. And when Chinese negotiators are talking, the meaning of their words could be completely different from what they sound like. My interpretation could make things straight.
Justin: In your opinion, what basic skills and experiences managers need to be successful? Any advice for graduating students at RPI?
Sam: I have seen a number of students who go overseas, go to the best school and then come back to China, expecting to be awesome managers or consultants, get spanked. Because they’ve actually never done business in China, they have to understand from the beginning that there will be differences. Many Chinese do not have any business world experience until after they go to college. Whereas most people in North America begin their summer jobs in high school or university. So they already have a couple of years’ experience working with business mentors before they graduate. Chinese do not have such experience and exposure. So, for those Chinese students who are studying abroad, my advice is to get as much real business experience as possible in western countries, but also realize that things are different in China.
For westerners, again, I think China is a great place to be. Read my book, do your homework, then come to China with an open mind, try connecting with people here and get in the game.