Marketers must help solve China free trade puzzle

Free Trade Agreements have become the flavour of the year. It is now the smart thing to sing the praises of Free Trade Agreements!
The concept of free trade was developed a long time ago by the classical economists. It was a neat theory. If every country made what it was best at making and bought what they required from others who were best equipped to make them, the world will make the best use of global resources. Nice idea, but totally impractical.
Free Trade Agreement with China
Similarly, the theory is very attractive. If the market in China was open to manufacturers in Sri Lanka, it will be a huge growth opportunity for Sri Lanka. The engine pushing this are economists and politicians.
Economists
Economists are generally nice people, ensconsed in their book-lined offices, developing new theories or disputing those formulated by others. They do not have the street wise perspective of those who have honed their skills in the cut and thrust of the real world.
Can economists make a valid judgement about whether Sri Lanka can sell their products successfully in China?
Politicians
They are also nice people, full of charm. They have developed excellent skills to persuade people to vote for them. That is what they are good at and they are experts in this art. But most of them have not done a day’s work in the real world of manufacturing businesses. Are they competent to determine whether access to the market in China is a great opportunity?
The flip side
If China opens its market, Sri Lanka has to reciprocate and open the market to China. What will happen to Sri Lankan industry in this scenario? Are economists and politicians the best experts to answer this question? Probably not!
There is a need to create a nexus between the nice theory and the real world. Marketing professionals have the most relevant management skills to perform this role.
Why marketers?
Because the essence of the management discipline we call marketing relates to the processes of identifying the needs of consumers, creating goods and services that satisfy them, then making consumers aware, and bringing the product and the consumer together so that the consumer can part with his money and take the goods or services. They are the people close to the consumer and the market.
These processes must be used to establish whether and what Sri Lankan products can be sold successfully in China. They must also be used to ascertain whether products from China can be successfully marketed in Sri Lanka and if so the impact on local industry.
A raft of difficult questions
To get to the answers, some difficult questions must be examined, such as:
Do we have some unique consumer products that are not available in China?
If what we make is also made in China, can we pursue a positioning that makes them different?
Would our industrial products encounter strong competition from identical products made in China?
Will they have a cost advantage to be able to market them at more attractive prices?
What research will have to be carried out to find the answers?
How can the channels of distribution be accessed?
Can we meet the criteria for getting products into super markets?
Will using wholesalers be the answer?
Advertising and promotion will have to be used to tell Chinese consumers about our products. What are the costs of advertising? At what level of sales will they be affordable?
Indirect methods of entry
If the research indicates that direct marketing is a formidable challenge, are other methods of entry possible? Would it be possible to be contract manufacturers to Chinese firms (like the apparel industry has done very successfully with Western firms)?
This is a short list to merely illustrate what needs to be done. Many more issues have to be examined.
Impact of products from China on SL market
Free Trade Agreements have two sides, so China will have access to our market.
Another raft of issues have to be examined. Do they have matching competing products that can compete against our consumer and industrial products? Will the market be large enough to tempt them to enter? Will they consider the barriers of entry too troublesome and stay away? However, the key question is what will happen to our industries if the Chinese companies do decide to enter the market.
A think-tank
What Sri Lanka needs is a very good think-tank to address all these issues and to discuss the outcome with industry and with the Government. Through such a process free trade proposals can be structured in manner that is beneficial and not harmful to our interests.
My experience
I remember vividly what I encountered many years ago when I launched Reckitt Benckiser products into the market in China. It was nightmare journey.
The first hurdle was creating brand names. Mandarin is largely a pictographic language. This means that each mandarin character has a meaning. So you cannot create a sound with no meaning. Therefore, we could not use Dettol as a brand name. We had to create a word in mandarin that meant killing germs that only very remotely sounded like Dettol!
From that point onwards it was a hard journey working through the channels of distribution. But the key issue was to persuade Chinese consumers to switch to our products. It was big bucks in advertising and big bucks in losses.
Multinationals like Reckitts had long-term visions and deep pockets to pursue them! China is very different now, but the challenges remain.
Marketers
Senior marketers such as Prof. Uditha Liyanage, Eardley Perera and Amal Cabraal and communication experts like Lilamani Benson, Ranil de Silva, Nimal Gunewardene, Varuni Amunugama Fernando (and there are many others with similar skills) must take the initiative and set in process a think-tank project to address these issues
Social responsibility
Business has a responsibility to their shareholders. They have an equal responsibility to the country. The chairman of companies should insist on a vibrant commitment to social responsibility in their companies and get their top management to play their role in addressing national issues.
The private sector must not wait to be invited. They should take the initiative and address and debate national issues.

[Lalith de Mel, M.A (Cambridge University) AMP (Harvard), is a former Main Board Director of Reckitt Benckiser Plc UK and CDC Plc UK, former Chairman of Sri Lanka Telecom Plc and Board of Investment, Senior Advisor to the Ministry of Finance and Chairman and Director of many companies both in Sri Lanka and abroad.]