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Dragons at Your Door: How Chinese Cost Innovation Is Disrupting Global Competition

1 rating: 5.0
A book by Ming Zeng; Peter J. Williamson

Starred Review.According to business professors Zeng (of Cheung Kong Graduate School in China) and Williamson (of INSEAD in Fontainebleau and Singapore), the slogan of the China International Marine Container Group, "Learn, Improve, Disrupt," could just … see full wiki

Tags: Books
Author: Ming Zeng; Peter J. Williamson
Genre: Biographies & Memoirs
Publisher: Harvard Business School Press
1 review about Dragons at Your Door: How Chinese Cost Innovation...

Could mean the difference between life and death of your company/industry...

  • Jun 21, 2007
It seems as if there have been a rash of books on China's increasing dominance in the global markets, and for good reason. Dragons at Your Door: How Chinese Cost Innovation Is Disrupting Global Competition by Ming Zeng and Peter J. Williamson lays out how China uses their cost advantage to get their foot in the door of a market, and then dominate it. This is a book well worth reading to understand what you may be facing in a few years (if not already)...

Introduction - Dragons at Your Door; Disrupting Global Competition - How Did They Get Here So Fast?; Cost Innovation - The Chinese Dragons' Secret Weapon; Loose Bricks - Rethinking Your Vulnerabilities; The Weak Link - Limitations of the Chinese Dragon; Your Response - Winning in the New Global Game; Conclusion - Charting the Future; Notes; Index; About the Authors

Zeng and Williamson show, through numerous examples, how Chinese companies have exploited their cost advantage to become leading global players in markets. Generally speaking, they get into a field and start with lower pricing due to their lower wage structure. They then look for a "loose brick" in their competition. This is a market segment that they can attack and force a competitor to retreat or abandon. Once that occurs, they are then able to start offering both low cost and high innovation/value solutions to the market. Often, the competition will give up these lower-margin segments to concentrate on the higher-margin businesses, thinking that the Chinese can't compete in that area. But more often than not, those high-margin niches will also succumb to the dragons, leaving a company struggling for survival. It's not a pretty picture... But rather than just paint a "gloom and despair" picture, the authors also outline where the weaknesses lie in China's capabilities. Using this information, companies can both protect their established turf as well as compete against Chinese companies in their own markets. It's not an inevitable conclusion that a company will have to fold under the cost advantages offered by a Chinese competitor.

I see this book being valuable on a couple of levels. First off, it raises awareness of an overall plan that is often overlooked when viewed through the daily competitive battles. Giving up a market segment might not seem like a bad idea, but that's usually not the end of the story. Second, it can help guide partnerships and access to the Chinese market. When faced with the potential market share of China, companies are often willing to give up more control than normal just to gain access. But that short-term view can lead to long-term loss as the Chinese learn from the more established partner, start innovating on cost, and then eventually become direct competition with major advantages.

The effect of China on your company's survival can not be underestimated. Time spent reading this book might make all the difference in the world...

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