EP51: What You Need to Know to Expand Into China

China Market expert, celebrity and influencer Heidi Dugan shares expertise on how to successfully enter China and what not to do

During COVID many businesses shelved their international expansion plans.  However, the world is opening back up and now is an excellent time to be recommencing that strategic discussion in your business.  

If you’ve considered exporting to China, now might be the perfect time.  This week China market expert, growth strategist, TV Host, celebrity and influencer with over 6m followers, Heidi Dugan, shares her insights into the current state of business in China, understanding Chinese consumer values, the characteristics of Western businesses who fail in their efforts to enter China and her 7 secret tips for succeeding in penetrating the market. 

Never miss an episode or a free resource by joining the ScaleUps community.

Hear about upcoming guests before others, send them your questions and access free resources to help you scale your organisation.

Thank you! Your submission has been received!
Something went wrong while submitting the form. Try Again

[00:00:00] Sean: G’day everyone, and welcome to the ScaleUps Podcast where we help first time Founders on the secrets of scaling so they can fulfill the potential of their businesses, make bigger decisions with greater confidence, and maximise the value and impact they can have in the world. I'm your host, Sean Steele, and my guest today is Heidi Dugan, Director of Arete Group, international expert and advisor to governments and companies in Australia and the UK and the US on entering and succeeding in the Chinese market. How are you today? 

[00:00:27] Heidi: I'm great, Sean. Thanks for inviting me on the show.

[00:00:29] Sean: Oh, it is my pleasure. Maybe a bit of background for people who aren't familiar with your story. You're the Founder and Director of Arete Group who I just sort of introduced, but you're also the chair of AustCham in Shanghai and you're a council member for the University of Southern Queensland in the context of, I guess their presence in China. Is Arete, is that about the sort of realisation of potential? What's the origin of that word?

[00:00:59] Heidi: It is, it's interesting. It is. It's a Greek goddess and it's about reaching full potential, sort of full potential in everything that you do. So, I thought it was a great word, a great company name to choose because, you know, I'm a big believer in doing one thing and just sort of blasting it out there, making everything just work, work, work for me. 

[00:01:25] Sean: Yeah, I love that. And you know, I can think of so many times in the past where I'm usually the guy that you do not come to for creative names. I always have to find other people for that. But you know the number of times you're searching for a word that's got a great origin, that then it’s also going to make sense in how long it is and all rest, you found a great one, so I'm very impressed. Now, you have got over 6 million fans. You sold 2 million worth of product in an hour and a half on the Oriental Shopping Channel, you are the only foreign host to obtain a license to live broadcast on Chinese national tv. You're the go-to health and wellness, sort of food and beverage influencer and celebrity there. And you've been recognised through a whole bunch of Australian media and Chinese media, and I don't think there's too many other people with your credentials, certainly that I've come across that it really is set up so well to help Aussie and US based companies, think about, uh, where the opportunities are in China today and also… You know, I'm sure you have lots of horror stories. Over my time, I've known a lot of Australian companies have attempted China, some 2, 3, 4 times, some have ultimately succeeded, some have ultimately not succeeded. And I've done some capital raising in China as well, and so had some experiences or be they limited and it's a fascinating topic, so I really was keen to talk to you today because many of our Founders in our audience, probably pre Covid had international expansion on their plans. You know, most of these people are building good businesses, they're growing well. They've got lots of different ways they can grow their businesses. One of those is international expansion. And of course when people think in Australia in particular, where would we naturally expand to, they think; well, what's the biggest market and where do we have. I would love to say strong trading relationship. Maybe if we go back three years ago, there's a few less blemishes on the trading relationship, but certainly a strong partner and obviously a huge market. So, they think China. But the world's changed and a lot of Founders I know have pressed pause on things like international expansion because they're just not really sure how the world's kind of playing out. So, I really wanted to unpack with you today a bit where China's at, at the moment, what the relationships like, and then more, broaden that around, how do you actually succeed when you go into China and one of the things you not do and all the rest. So, that's where I'd love to go with you today. Are you happy with that? 

[00:03:54] Heidi: Yep, that sounds perfect. 

[00:03:55] Sean: Awesome. So, maybe you could start with a bit about, actually, where is China at, at the moment? So, we're recording this in sort of end of September, 22. So, a lot of the world is on the other side, I guess if there was really another side, another side of covid and a lot of things have returned to normal. How's China at the moment in its relationship with itself and Covid and then also its relationship with the rest of the world and how sort of open it is?

[00:04:23] Heidi: I mean, China is open at the moment. It's just that it has quarantine and, at the moment it's a seven plus three-day quarantine. So, it's seven days in the hotel, then three days either in a home if you have a home or the other three days in a hotel. You know, I think what people don't understand is that there are a number of Issues that China has to deal with, that a lot of other places don't have to deal with. You know, it's the aging population that hasn't been vaccined, but also just the sheer quantity of people and the way that they go about their lives. And one thing that I do know is that China always acts on the best for the greater amount of the population. And so, although from the outside, it may seem that they're making decisions that perhaps don't make sense to us, that there is a lot of logic behind those decisions. And that's really something that you only really grasp when you've been living in the country for a long time. There's always a plan. There's always a good plan and they always get through it. And we are seeing very much now is that they are getting through it. When you're in China, you're moving around very much like as per usual, day-to-day life. We're going to restaurants, we're doing a lot of things. It's really more the travel that is being restricted at the moment. And I think that, even with the travel, it's more why business people not traveling is because a lot of the time they just can't tack on that extra 10 days onto travel. So, if they're coming in for a week to have another 10 days to do business, it makes it a really long trip. And so, a lot of business people are deciding not to do that. It also because there's a little bit of uncertainty all around the world, companies are really sort of reflecting where is the area, what's the country that we need to place most of our commitment and our focus and people, what they should have done in the past is that look at really scaling in a way that is sustainable, not putting all their eggs in one basket. And that's something that we've all learnt to do, but I think a lot of companies didn't do it. And they've put all of their eggs in one basket, and that has become quite unstable at the moment. So, I think what people are doing is just reconsidering and saying, you know, we need to have either a factory or a presence in other parts of Asia or perhaps also Europe. And the reason that they can do that is because they were in China. They were already experiencing what it's like to grow internationally. And I think that's the thing is, is that China is such a great ground to really teach you how to do international trade. It doesn't seem so far away from Australia, but you know, for Australians to go, I'm going to move into the US market, that seems like a bigger step. So, the thing is, is that it's taught people that expanding into another region is something that you can do. And more and more people were doing it because of China, because of the opportunity that was given to them in China. And so, I think that through that experience and through the influence and in the media of all the companies that did succeed and have succeeded in China, those companies have really sent out a, a good word to say; hey listen, we can not only go to China, but we can go to the US, Australian companies, expanding around the world, or US companies expanding around the world is something a smaller company can do, you don't have to just be one of those global conglomerates. So, I think that the China experience and everything that has happened up until now has really showed the rest of the world that international trade and business is something that is possible for smaller businesses that they can pretty much go wherever they want to.

[00:08:49] Sean: Yep. And I think, as you're talking, I'm thinking about actually that there are, I'll put them in the show notes, the links and the show notes for those who are listening. If you want to hear some stories, both of US and Australian based businesses who have succeeded going into China. I've interviewed at least two or three Founders. One with an e-commerce business, one with a marketing services and promotional products business. And I can think of a couple of others. So, we've interviewed quite a few Founders who've succeeded not only going into China as, generally, to your point, as part of a strategy for internationalisation, not always as the first place. Sometimes once they've got a bit of experience, sometimes in some other markets. And really as the only place, but I'll put those in a show notes for people. So, if you think about, why don't we start with the stuff that people typically get wrong, Heidi, because I'm sure there's a long list of that. What do you think are the most common things that people get wrong when they think of that? Go, yep. Can see the opportunity. Big market. I can see there's an appetite for our product in that market, or our service in that market. What are the typical things they get wrong in those early stages that really set them up for failure?

[00:10:01] Heidi: Unfortunately there's quite a few, but to list off some of the main ones and that is that when they create a strategy, it's not localised. So, they build it based on what they believe it to be, based on their information and the way that they do business in their home country or perhaps in another country, China and the method of coming into the country are different. Like we've got cross border, we've got different certification that needs to be approved, and the different platforms are completely different to the rest of the world. So, that's one thing is, is that they have this strategy and then they don't localise it. And then the next thing is, is that they really don't commit a hundred percent. You know, when you are going into a new region or a new country, people think that because they're big in their own country, that they're just sort of moving over. And that's really, it's not the case. You know, I always say it's like; well, whatever it took you to get where you are in your home country, whether you have to mortgage your house, you have to do this, blood, sweat, and tears. That's what you need to do in another country and are you actually prepared for it? Do you have the finances that back you? Do you have the personnel and the team that can help focus and support that growth. That's one thing that people just don't understand. And so, you see horror stories where they say, oh, I've got a distributor and they're looking after the brand and they're getting into the shops and we've sent over a container, and then they never hear from them again. And it's like, well, would you have asked a distributor in your hometown to look after all your branding, to control your brands, your platforms and everything like that? And they're like, well, no. And I'm like, well, why would you do that when you're in a completely different country? So, there are things like that. I always say business is business as usual. So, whatever you do back home, you need to do here in China, but you need to localise those strategies. If you're using social media platforms and you're selling that way, you can do that here, but you need to use the social media that's here, and then you need to change the story and the way that you pitch it to the Chinese market. So, that's a really big one. The other one is, is when they believe that their product can only be used one way, and it's about not localising the message and their product to suit the market. When we all say a Chinese person, an Australian, American person, they want to make more money or they want happiness, or they want to get fit, or family goals. Just because that goal is there is it doesn't mean that the way that they get there and what they actually want from that is the same.  

[00:13:07] Sean: What's an example of that for you, Heidi, that sort of springs to mind?

[00:13:10] Heidi: Things like looking at health and wellness I think is a really interesting one. One of the biggest ones that I was absolutely blown away with, because I'm very much in this area, is that if we look at Australians, Americans, we always start with fitness. Like, what's your morning routine? How do you change that morning routine and wake up early? You know, you've got your 5:00 AM club and you've got all of these sorts of things and changing because we know that that's going to have a knock-on effect to the rest of the day. Now, I will tell you, there is very, very few gyms, yoga studios, fitness studios, or anything that even open up in the morning. Which really sort of surprised me because I'm like, if I want to do yoga, I want to do it before I go to work. The times that they have the most people coming is either lunchtime or in the evening. And the reason for that is it could be that the Chinese person is waking up already at six o'clock, but it takes them an hour and a half to two hours to get to work. Or that they're working later or that they're going out later and they're sleeping at like 12 o'clock, One o'clock, Two o'clock. So, their actual day is very different. And then there are things like, if I decide to buy a health product, I'm very much of a Western sort of background, and if I like it, I'm convinced and I'll bring it and I'll buy it and I'll bring it into my home and I'll take it. Whereas the Chinese are quite different, they'll look at it, they'll research it, they'll see who else has had it, and if they bring it into their household, they will then have everyone else in the house. And that means the grandparents, them as the parents and then the kids all having an opinion about what it is they're doing. So, as an example, we were doing like detoxing and juicing. Now that's like, even if I have a green juice, my husband is Chinese, my mother-in-law comes over, I've got all these vegetables in a blender. Blending them up, I'm drinking it. And she's like, how can you just drink that? Like, that couldn't possibly be all you drink. That's all you have for breakfast. And I'm like, well, you are just having a piece of bread, I'm getting a lot more nutrition from it, but it's because I'm drinking it and I'm blending it, it's cold, it's not something that you're eating. So, there's a really different concept of what is healthy. They're not saying don't eat vegetables, but if I had have had a whole plate of vegetables and I had put some hot food on it and what have you, then she would've been a lot happier. So, it's really about looking and making sure that you really localise whatever it is that you're trying to bring in, whatever service it is, is not only how can you fit it into their lives, but how did they want it to fit into their life. And that's really one of the, probably one of the biggest areas that Western companies just don't understand is that sticky point is always going to be when someone wants to bring it into their life, but it's got to fit into their life too. And the other big thing is, is that, you've also got to convince more than one person in the family. You've got to convince at least two people or two or three people in the family that whatever you're doing is good thing. So, whereas Western culture, it's like, I don't care what you think, I like it, I want to do it, so I'm doing it. But you can just imagine if you've got someone constantly telling you shouldn't be doing something, shouldn't be doing something, it's less likely that that product is going to have much traction in the family. 

[00:16:54] Sean: Yeah, it's interesting. You know, I've spent the last 15 years in education, and so in education, especially when you're dealing with international education, you're very used to thinking about the fact that actually the most influential person in this process is not the student. The most influential person is either the agent or the parents of the student. And sometimes, you know, it's the whole family getting behind the student. So, you're used to creating material that suits the different stakeholders in the decision making process. And it's kind of part and parcel, but there's many areas, as you said, that are not built that way.  And so, if you haven't actually thought about those influential stakeholders in the way that your product is positioned, your marketing messages, your collateral, whatever it happens to be, then you could find yourself failing pretty quickly. Speaking of failing, you've been there for 26 years now, you would've seen plenty of businesses, attempting to enter China, but failing miserably. What are one or two examples that stand out to you and that you've got some insight into why? 

[00:17:59] Heidi: Well, I won't say the actual company's names. I think the…just if I first of all go across the board is they come in, they're very strong because they've got a very niche amount of products and they push, push, push on that. They really listen to the consumer and they grow and then they grow and then they go, you know what? We know it all. And then they start to expand their range to be way too big, and then it becomes too diversified, and then someone else with a very niche market is going to come in and start to pull from them. So, that for me is a big thing, is just to make sure that you've got to have your promotional pieces to continue to create interest, but be careful that it doesn't get too big, that you're not trying to be everything for everyone. That's probably the, the most difficult decision because when you are successful in China, you kind of think, Well, what else? How much more could I make? And that's the thing, is that it's really important to just continue to connect with your consumer to create more product that for them, but you've got to be very careful that you're not expanding too wide and then you're trying to grab too many people and not properly service your original customers. 

[00:19:26] Sean: Yeah. What would you in such advice in all markets. It is a constant risk for Founders, particularly who start to scale, is that they're starting to build sort of machine and engine behind the business and because of the pressure and the demand to feed the beast, if you like, they often end up starting to go into ancillary products or ancillary types of customers, and they start to become broad and generic and nothing to no one. And it's usually, there's a reckoning, there's a realisation when they plateau and maybe they start to go backwards, that they have to refine, they call, they get rid of all the noise, they you usually get back to the stuff that they were great at in the first place. Or one specific customer type and they just nail it and they go for scale right there. And they usually get the next stage of growth.

[00:20:07] Heidi: Absolutely. And that's what I've seen with other companies is where, they've sort of really grown, but they didn't profit at the beginning. And I think that's, you know, we've seen also with Chinese companies that have got great investment is that the marketing cost was always higher than the actual product that was being sold. So, it wasn't a sustainable model. I mean, it's a great model if you are trying to just increase the size of your company and then sell it. But still, you know, there's going to be a point where they're going to go; Okay, this just doesn't make sense. So, there's a lot of companies where we go, Wow, how amazing. They've grown so much and they're worth how many million dollars. And I know for a fact that they're making no profit at all. And the shareholders are now going, oh no, what do we get ourselves into? So, I do believe that whatever strategy you use or that you want to use in the future to really have a sustainable, profitable business, you have to implement them at the beginning. So, a lot of people go, no, no, no, no, we'll just whack in so much, we'll figure that out later and we'll figure that out later. But the problem is, is then you've got your marketing is always going to cost you much, and then the product is going to be too low, the product price is going to be too low, so then there's just no coming back from that. And a lot of people are going to lose a lot of money and that's what we have seen in this market. And the problem with companies like that have done that. And this is one of the conversations you'll hear a lot in China, especially in some of these new, more sustainable, ethical companies, is that, when a company puts too much in the marketing and they're pushing, pushing, pushing, and bringing the prices down, they are paying too much for services like key opinion leaders, celebrities, platforms. So, what that does is those people take more and more and they lift their prices and it stops other companies from actually being able to enter and use them. So, they've literally pushed the market into a place where they're continually paying more and everyone else can't afford to do it. And so, with a model like that, it's always going to topple over and hopefully sort of clean itself up, which is exactly what's happening at the moment. People are getting a little bit more realistic in what they pay for things. 

[00:22:43] Sean: Right. And so, are there some examples that are go-to examples in your mind of companies that you think have done it well in terms of expansion into China, out of the Australia or the US and things that you've noticed that they did really well?

[00:22:57] Heidi: You know, we've got Bundaberg, the drink and so actually one of their 31 Joel is one of the company that brings it into China, and I've been so impressed by, you know, about a year and a half ago, we sort of saw them at more expat places, you know, supermarkets and things like that. And then… 

[00:23:22] Sean: And this the rum, or this is the Bundaberg? 

[00:23:26] Heidi: No, this is the Bundaberg for the ginger beer, for all the flavour soft drinks. And it was just a very one, they've got a great partner. But it was just a really great way that they very slowly entered the market and just done so much. They've done so much to support it. They've got a great team to support it, but you see them in all of the cafes and that now, especially really, really local cafes. So, I think that that's been really interesting one. We are working with a company called Bondi Chai, and I'm really, you know…Like, there's no chai in China. So, it's been really interesting working with them. And as we've entered the market, we've had a lot of people reaching out to us because of the way that we've been talking about it, the way that we've been talking about it to trade partners and we're getting a lot more interest in the product because it's a very unique. And it also sets on a lot of trends that are happening in China. So, I see them as this very successful brand and I see that their potential is absolutely massive. So, there are a lot of companies. We see some like Blue Steel. You know, they've been in the market for a long time. You see companies like Rio Tinto, you know, there are a lot of companies, big, big, big companies that have been around that have been incredibly successful. I mean, even within the Chamber we've got nearly 200 members and a lot of them have been around for years and they're building, building their business, and that's why they're still here. They've been here for 10, 15, 20 years. So, it's been incredibly successful.

[00:25:16] Sean: And do you think, you know, one of the things that you mentioned there also with Bundaberg, and I've heard this before, that there's a bit of a difference between the West that there's a sort of, almost a natural appetite to come in loudly and big and accelerate really fast and sort of big and splashy, whereas there's more of a slow, build it organically, you know, a bit under the radar kind of approach in China. Do you think that those kinds of approaches tend to work better? Like the sort of slow building, get the relationships right, and then?

[00:25:52] Heidi: Yeah, I think the thing is this, is, it really depends on what the company's got, how much money they've got, and what they're actually selling. This is why, you know, a lot of people give advice to brands and they say, you know, just either coming big, you've got to have lots of money. You know, hit it hard. And that does work for some companies, but for other companies, they just don't have that. And then, I mean, I particularly like that sort of very slow, sort of just seeping into the market and then you sort of turn around and it's everywhere. I've always liked that because then you're not, especially with competition, you're not really sort of getting the word out there and people are sort of, when they realize the brand is all around them, it's already sort of too late. They've already made their mark, so other companies can't do it. But that tactic doesn't work for a big company. You know, sometimes they just don't have the time to do that. And so again, if a company's got a good budget and that they want to hit it hard, they can do it, but they still need to go, okay, hitting it hard doesn't mean just dumping money. It still needs to be a proper scale business, not just, here it is, we're dumping it in, cross our fingers and wish for the best. And that is what I think a lot of companies do. They go, you know what, if we just get 1%, and it's like, oh no, if I hear that again…You know, the amount of times that we've heard that is just like, ahhh. So, that's why, we've seen some amazing things. Bellamy’s, we've seen A2 Milk, a lot of the baby and mom products have really done a great job, especially for Australian products, have done an amazing job. And then supplements, you see Swiss, and then you also see smaller companies like Vitaglo that have done very well and they've been very strategic in how they do it. So, both types of companies can work, but they need to know what works for them and their product. And that's why I say is the strategy needs to be localised.

[00:28:14] Sean: Yep. I remember talking with, there was a great example of this in talking with Anneke, who runs Rufus, which is a pet accessories business. She built it up in Australia and her first foray into, I think it was the States, and they'd made the assumption, this is their first sort of international expansion opportunity. And they'd gone to the trade shows and they'd taken all their stuff, you know, they'd had a huge product range in Australia, massive. And they'd go to the trade shows and people would be like, oh, tell us about you and what have you got? And they're like, well, you've got everything. We've got like 4,000 products. You tell me what you want. And they're kind of like, nobody could get the strategy or the story to your point until I actually localised to really dug down to the things that made a difference and over there I think it was a particular kind of cat litter, which was not really popular in Australia, but really resonated with then there's a space in that market. People got to understand it and that became the sort launchpad of other products later on. But to your point that localisation of strategy, you can't just pick your business up, plunk it in a new country and expect it just to work with a bit of language change. It takes that localisation.

[00:29:20] Heidi: Absolutely. Absolutely. 

[00:29:22] Sean: What do you think, Heidi, where do you see some of the bigger opportunities in the next five years. Like are there certain segments that seem to be growing really fast? If you're in Australian business and you're trying to get that almost macro view of where some of the opportunities are, and China is such a big market, right? But are there certain spaces that you think are going to be more interesting in the next five years for Australian or sort of US based businesses, particular services? . 

[00:29:49] Heidi: Absolutely. So, I think, the last 15 years was really about food and beverage, international food and beverage and there were many companies that made a lot of money in the market. That is changing and that has slowed down quite a bit. Now, the big areas we see is definitely health and wellness. Now, we've seen a lot of supplements coming over the last sort of 5, 6, 7, 8 years. What we are seeing now is a bigger variety on that natural products. We're seeing a lot more of protein powders coming in because of fitness being a real focus for the Chinese government, and the other areas because now the animal testing requirement has been dropped that skincare and make up, any beauty sort of products now can come in without having to do the animal testing. So, that is going to be a massive area where we'll see an influx of brands. Even now from Australia, we're seeing some really interesting brands coming in because the animal testing has been dropped. So, I mean, with me and my company, we've worked in sort of food and beverage for many years, but we about three or four years ago were very much pivoted into the health and wellness and now natural beauty, and that's where we we're setting up all our new company rise. This is living where it's an actual online offline programs, courses for Chinese people to take, which are actually going to help them take back control of their life. But we'll be bringing in all of those health and wellness brands to come along for the ride and to connect with the consumer. So, we just see that it's a massive area, health, wellness and when we talk about services, anything that provides or that taps into that area, I think is going to be really interesting, whether it be services like coaching services, that's going to be something that will start to improve. And then also the fitness classes, you're getting so many more of those fitness schools, like F45, CrossFit, and that all coming into China. So yeah, so I think that and then I said is just now there'll be so many more beauty brands that would never have entered China because of the animal testing; now going, this is fantastic. Yes, we want to enter. Previously they were doing cross border.

[00:32:34] Sean: Okay. And so, if you were going to summarise the key principles that you think, you know, if you're going to give a Founder some guidance on these are the things you've got to get right before you even spend much, or you fully get in to the strategy. Like how would you advise people to get started and can you kind of wrap your core principles of succeeding into that place?

[00:33:00] Heidi: I think the first thing, if someone is thinking of expanding their business, they should either have a very solid base for their business already, or they just need to put a hundred percent commitment into the China market. So, as I said, like Vitaglo was one where they actually started in the China market, expanded and then came back to Australia. So, there you can do it, but there's got to be razor focus. And that's what, when I am interviewing, meeting people, companies that want to work with us, the first thing we look at is how committed are they? And when I talk about commitment is, is there someone in the team that is absolutely going to be dedicated on the China business? Is there complete support by the CEO, the Founders of the business, do they financially have enough to keep running for a year, a year and a half without making any money? And then, is their product able to be, you know, we don't change it often at the beginning, but there may be things where they'll need to change the brand or the product packaging. So, it really just depends on those things. If they're able to do those things and they don't have to at the beginning, but that they're able to sort of scale when they're getting larger quantities that they can change packaging, then we'll have a chat with them and see where they want to go. And then the second thing, can they grow? You know, how do they want to grow? Do they want to grow fast? Do they need it to be very much a maintained sort of growth so that it doesn't ruin their business back home, the production, things like that. So, we take all of those things into consideration. But, you know, the big thing for me is that, whoever it is, you must have someone on the ground here in China, and you don't have to set up an office, because even with that, if you set up an office and you've got a Chinese person, they're still going to be real problems if you've never worked with the Chinese culture and things like that, you're going to have problems making that work. So, I definitely suggest that at the beginning and even throughout that you've got someone that is here, not someone that says they've been in China for many years, but have been also out of the country for two, three years. Because even me, during lockdown, Covid in 2020, I went back to Australia and couldn't get back into China, so it was about nine months. By the time I get back, like the pace is so quick, I've like missed half of the things even though I'm working every single day. So, you really need to have someone that can represent you that is honest with you, that will give you the real information and that you can rely on to create those trade partners and that works on behalf of you. But really, commits as much as you are.

[00:36:04] Sean: Yeah, and I think it's fair to say in most of the cases where I've seen Founder succeed in entering China, it's because they've had the right local partner. And that's not always easy to find. So, that might be starting with a consultants like Arete or there are many more consultants of people who specialize in doing this, but like you would with any other partner, you got to do your homework. You got to get a sense whether they're the right people for you. You got to get a sense that the legitimacy and don't throw the farm at it until you're sure. But it is a material commitment entering a market like China and therefore, you have to have both the resourcing and the financial capacity to make. It's nothing worse than getting six months into the strategy and actually you didn't have the runway, and then you've wasted everybody's time, including your own and your own money. 

[00:36:56] Heidi: Yeah. And so that actually happened with us, with one of our clients. And they were actually making sales in the first one to two months, but by the fourth month they're like, we're not making enough. We can't do this anymore. And they pulled out. It's like, that's a waste of money. Because the thing is, if we had have just sort of persisted a little bit and sort of pushed a bit harder then and had a bit more sort of support, then that business could have really succeeded. But when you sort of getting cold feet and you sort of yes, no, yes, no, but the fact is that they just weren't really able to, and they weren't as committed as they thought they were. And that's fine, but I would suggest that you take that into real consideration because, you know, China is not a make a million dollars in day one sort of thing. The companies that have made money, started making money a few years into it, but they set it up and they had a solid base and they really continue to really maintain the relationships and to the expansion. I think, also, the big thing is to have a really good and clear idea of what your goal is, but you need to be very flexible. So, we work four-month slots. So, we've got our one-year, two-year, three-year goals, but we only work in four-months slots because we know that things are going to change rapidly and we need to be able to jump onto all of the opportunities, but also, we need to be super flexible. If something's just not working, we need to be able to very swiftly pivot.

[00:38:42] Sean: Such good advice. Heidi, anything else that I haven't asked that you think I should have? Other nuggets, anything else that you'd like to leave people with as they think about whether expanding in China, expanding into China is right for them, whether the timing is right. Anything else you'd like to leave them with?

[00:39:00] Heidi: I think, in the media, because of there's been a lot of a bad rap in the media, I think with China and relations and things like that, and a lot of companies have pulled out or have gotten scared and haven't gone through with their original plans. My thing is that, this is actually meant that this is the perfect opportunity to come into the market because all of those other companies have either left or they're not entering at the moment. And so, it means that it's much. Easier to come in. And the other thing is like, as we're seeing with the animal testing, there's a loosening up of some of the areas in business here in China. And I think there are areas that if you take the opportunity now, you'll be one of the first that can actually really benefit from it. We're seeing the current environment is very much like I saw 15, 20 years ago. But the thing is that we have hindsight now. We've learned so much about how to do business here. So, if anyone is thinking and really feels like they're committed, then now is actually an excellent time to step forward when other people are stepping back. That's always been my of philosophy, when everyone gets afraid of doing something, then that's the right time to step forward and do something. But just be very certain about that step. So, I think that China's got incredible opportunities. It will for quite some time. And anyone that comes in now, I actually think we're going to say a second wave of some very serious money being made by those companies.

[00:40:45] Sean: Yeah. And I think that's so true, and many Founders who listened to this will have also done that same thing during covid, but when they had competitors who went into pure survival mode and they actually invested heavily and went really hard, and they've come up the other side with some really big advantages. So, I think that it's sage advice on most markets. When people are fearful, it's a good time to really be inquisitive and consider whether that's time to go hard. Well, Heidi, huge thank you from me. I really appreciate you sharing your wisdom with our community. How should people get in touch or follow along with what you're doing? Where would you send them to?

[00:41:24] Heidi: Yeah, probably the best thing is to go to the website, heididugan.com, all of our information is there, all of our social media, LinkedIn, Instagram, it's all there. So, it's probably the best place for people to go to and find out more about us.

[00:41:43] Sean: Beautiful. Thank you so much for your time today, Heidi. Folks, if you've enjoyed the show today, we of course massively appreciate if you were to leave us a review, if you just share this with one person, you'll be helping them. You'll be helping us achieve our purpose, in helping Founders maximise the value and impact they can create in the world. You've been listening to the ScaleUps Podcast. I'm your host, Sean Steele, and we'll chat you again next week. Thanks so much, Heidi.

About Sean Steele

Sean has led several education businesses through various growth stages including 0-3m, 1-6m, 3-50m and 80m-120m.  He's evaluated over 200 M&A deals and integrated or started 7 brands within larger structures since 2012. Sean's experience in building the foundations of organisations to enable scale uniquely positions him to host the ScaleUps podcast.

Other Episodes

EP56: How to Create Simpler, More Impactful Marketing For Your Business

Simon Dell, Founder of Australian marketplace business Cemoh (which connects businesses with marketing talent) helps to improve your marketing.
Play now

EP55: How to Scale Without Burning Out

Award-winning reporter, expert, speaker and author on burnout, longevity and happiness Sophie Scott shares insight on how to prevent burnout.
Play now

EP54: Insider Secrets From Merger & Acquisitions Lawyer on Optimising Your Exit

Dealmaker and innovator in the legal community, Jerome Fogel shares his secrets on maximising the value of the sale of your business.
Play now

EP53: The Heart of Your Business - Your Values

ScaleUps Roadmap Program Facilitator and Podcast Host Sean Steele unpacks “Values” (content drawn from ScaleUps Roadmap program).
Play now

EP52: Selling Your Business - What You Need to Know (Episode 2 of 2)

Investment Banker Shawn Flynn shares the reality and process of selling your business, and tips to help you maximise the value of your sale (second episode)
Play now
If you’re enjoying the Scale Ups podcast, subscribe, rate and review.