Students help firm enter U.S. market
A Chinese software company is getting a marketing plan from University of Tampa graduate students.
By KRIS HUNDLEY
Published March 27, 2005
Beijing Rising, a leading seller of antivirus software in China and Japan, wants to break into the U.S. market. Larry Glover and four fellow graduate students at the University of Tampa have a few words of advice:
Don't bother targeting the personal computer market. It's taken.
Change your name.
And be ready to spend millions.
The UT students learned about Beijing Rising's U.S. aspirations last summer, when their classmates met with company executives during a study trip to China led by UT professor Glen Taylor.
Taylor asked the students, who are in a master's degree program in technology and innovation management, to formulate a marketing plan and present it to Beijing Rising when a group returns to China in May.
Glover, at 43 one of the older UT grad students, is used to pitching projects to Chinese clients. From 2001 to 2003, he and a partner were consultants on credit card and Internet security for a number of Asian clients, including several companies in China. Family matters - he has two young daughters - made him decide to limit grueling overseas trips, so two years ago he joined HSBC, one of the world's largest financial service organizations. In April, he moved to the bank's technology offices in Tampa, which it acquired when it bought Household Finance in March 2003.
Glover had been enrolled in a master's program at the University of Maryland via the Internet. He transferred to UT's program last fall and will graduate in December.
While the exercise with Beijing Rising is an academic one, Glover believes it's a harbinger of things to come. Though Americans spend billions of dollars on Chinese-made goods - everything from toys to clothes to DVD players - most of these products bear familiar U.S. brand names.
Lenovo, the Chinese computer company, gained recognition among U.S. consumers recently not for its products, but for its purchase of IBM's PC business. Chery, the Chinese car which will be brought to the U.S. market in 2007, is largely unknown here. Most Americans would be sorely tested to identify a single Chinese brand. But more than one Chinese company is anxious to change that.
"A lot of Chinese companies think they can enter the U.S. market," Glover said. "But name me one that has."
Tara Evans, the UT student who is coordinating the marketing project, is the only one who heard Beijing Rising's initial presentation last spring. She said she was impressed with the company's young executive, Jie Ma, even though his English was a bit rough and his PowerPoint was in Mandarin.
"They're very intelligent and know their topic well," said Evans, who works in Internet development for T. Rowe Price in Tampa. "But they have no idea where to start in the U.S. They're like a sponge, just soaking in information."
Since being founded in 1998, Beijing Rising has reportedly captured well more than 50 percent of the Chinese market for antivirus software and is No. 4 in Japan. The students were told that in 2001, the company had $8.4-million in sales. The business has about 300 employees and operates a 24-hour call center at its Beijing headquarters.
In analyzing the company's U.S. options, the UT students decided that the competition here in the personal computer market is so concentrated and so entrenched, a newcomer has little chance of success. The three biggest players - Symantec, McAfee and Trend Micro - dominate U.S. sales with similarly priced products.
"The market is very mature and to even erode those competitors' market share you'd need very deep pockets," Glover said.
So the UT team is recommending that Beijing Rising target cell phones, personal digital assistants and smartphones (cell phones with PDA capabilities), where viruses are just beginning to appear. The Chinese company reportedly has developed antivirus software for these devices and started marketing these products in Asia last month.
"They need to get it out in the Asian market first, then target service providers here," Glover said. "U.S. software companies will be offering antivirus software for these devices too, but nothing says they have to have the edge."
Providing security for even a minor share of the Chinese cell phone market, the world's largest, would give Beijing Rising strong proof of concept for a U.S. launch. But the UT team is suggesting that the company downplay its roots.
"In Japan the company is just known as Rising and that seems nonthreatening," Glover said. "So I'd advise them to drop Beijing from their name."
While the UT proposal will include plenty of details about the U.S. market for antivirus software, Glover said there are more subtle differences in the ways the cultures do business that need to be acknowledged. Chinese companies typically are very willing to meet with vendors but slow to close deals, Glover said, so early sales presentations in China often are sketchy.
By contrast, a U.S. service provider like Verizon would expect a well-researched, concise and thorough introduction to a product and would be more willing to make a quick decision about whether to proceed.
"In China, there's less a sense of urgency of selling the first time," Glover said, noting that his sales meetings in China often would include dinner and several hours of drinks. "If you made it to the 11 o'clock drinks, that's when you knew you had the deal."
Putting together a marketing plan at a distance has proven problematic for the UT students. Though the parties communicate via e-mail, Glover said if it were a professional assignment being handled in person, the project would have moved forward faster.
"The Chinese are, by nature, very secretive," he said. "They do a lot of courting first, feeling you out to see if they can work with you. We would have had dinner and drinks and gotten all the secrets out and we'd be working on something by now."
Glover and one other team member, Matt Collins, are looking forward to presenting the marketing plan in person to Beijing Rising officials in May. Glover has no illusion, though, that the company will act quickly on their recommendations. For one thing, he does not know what government entity sponsors the company and is responsible for approving major expenditures.
That's critical, Glover said, because if a company's sponsor is not well-placed, no money is released. Glover learned this the hard way as a private contractor. His consulting company was close to winning a large contract with the Bank of China, he said, with its proposal being sponsored by the mayor of Beijing. Then the SARS epidemic erupted, and the mayor was fired and jailed for his mishandling of the outbreak. Glover's company saw its contract reduced.
If Beijing Rising intends to make a dent in the U.S. market, Glover said, it must have the green light for funding from some well-placed officials.
"Entering this market would take millions of dollars and somebody is going to have to approve that step," he said. "And I've never met that gentleman."
Kris Hundley can be reached at firstname.lastname@example.org or 727 892-2996.