Smaller Companies STEP IN

THE EASIEST WAY TO "sell" the need for a China strategy is to pose the prospect of close competitors suddenly enjoying 30% to 40% reductions in labor costs from China sourcing. Almost as easy to document is evidence that 1.3 billion consumers of increasing affluence await the luxury of Western brands. (By 2025 China is predicted to become the world's largest economy).

Consider the approaches taken by the large multinational corporations (MNCs). In China, General Motors Corp. has become a market leader with its Buick brand, and General Electric Co.-with nearly a century of involvement with China-values the country as a market for both end products and low-cost sourcing. In 2002, GE trumpeted its 2005 China goals to generate "$5 billion in revenues and $5 billion in sourcing." That represented a doubling of GE's 2002 revenues, and the company succeeded.