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Have Your Peking Ducks In A Row

Some years ago, we were talking with a reporter in the Moscow bureau of a global wire service about a story we had broached on a client organization and its success in the emerging economy in Russia.

“Russia,” we said, “is the next China.” The reporter laughed, “China is the next China.” And he was right.

China has been the big story for years, yet the media continue the fascination with and focus on China. 

Just this week the global media reported that the surprising slowdown in the Chinese manufacturing sector may soon abate. However, that may be unduly optimistic as recent economic reports indicate manufacturing activity actually is still contracting.

Moreover this comes soon after the global media reported on the trend involving some US companies that had moved manufacturing operations to China, to move production back because it is increasingly expensive to manufacture in China.

Obviously this is not the end of the story narrative about manufacturing and China. But what may soon occur to the global media is that there may be a different link between those two trends cited above.

That is, manufacturers may not be quitting China simply because it has become more expensive. They may also be quitting China because it has become more difficult. There is a difference.

I recently attended a reception in London heralding the launch of a book by Peter Marsh of the Financial Times, “The New Industrial Revolution: Consumers, Globalization and the End of Mass Production.”

One chief executive officer with whom I chatted during the reception told me that his company has manufactured in China for years but that he has found it just too difficult.

“We are designing China out,” he said. “Whatever benefits there have been to manufacturing there are not worth the difficulties in doing business there.  We are designing China out of everything. We will manufacture everything we need elsewhere even if it is initially more expensive.”

This is not the first instance in which I have heard that China is just too difficult. Many manufacturing companies require “rare earth” minerals for a range of technologies but rare earth minerals are largely found in and tightly controlled by China.

Just this week, the World Trade Organization set up a panel to examine these rare-earth export policies after requests from many countries. Yet stories about the WTO action also note that despite the calls for this investigation the demand for rare earth minerals has been decreasing.

The reason may be that those companies that have depended on rare earth minerals for smart phones and other products, are “designing China out” of the process.  Certainly such research is happening now.

When the media grasp the magnitude of this trend, and its underlying causes, then this shift will be just the start of the story narrative about competitiveness and China.

That is, as far as the media are concerned, China will again be the next China.

Here is what will happen.

First, when the media discover this trend, reporters will contact companies to ask if the difficulties of conducting business in China are driving companies to “design China out” of their business model.

Second, when media contact companies, it will be difficult to avoid their calls because this will be a sensational story. The media will have tough questions about the challenges of doing business in China.

Third, putative experts will seize this story for their own gain. And regardless of whether companies themselves talk, any company conducting business in China is fair game to be included in such stories.

So what does this mean for you?

Know that this storm may be brewing. Realize that the story if it breaks may affect you. Prepare your messages right now both for internal and for external audiences. And more.

If you are a business or communications executive for whom China has been – and will still be –an important market, you may already know about this trend. If so, you may not think it is particularly new or newsworthy.

Trust me, it is both. And in that observation there is a larger significance here for you as well.

In this 24/7 news world, journalists too often are focused only on what is happening right now, particularly with a slavish obsession with “real time” chatter on social media about current events.

Eventually, the media discern the outlines of the biggest stories, which usually are also the bigger stories. Then the media rush to tell these stories leaving you to wonder how and why this is news.

But there is a danger in thinking that just because it is not news to you, it won’t be news to them.

So my counsel to you?

Have your Peking ducks in a row, every single day.

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