IT Outsourcing and Business Process Outsourcing to China/Asia

The Quarterly: You call that active inertia.
Don Sull: Active inertia—that’s my little trademarked phrase, yes. Another thing you can
do wrong is try to plan your way out of it. There are basically three broad approaches to
dealing with turbulence, and one of them is anticipation. You think, “If I just look through
the telescope, squint hard enough, look long enough, I’ll be able to see through this foggy
future. I’ll be able to predict what’s going to happen. I’ll know what to do.” That’s just not
going to happen. The record of people’s predictions in business, or in any domain, is very,
very poor. And as turbulence increases, the effectiveness of that approach decreases.
So I think trying to plan your way or think your way out of it is a real problem. I think
another one is just doing what everybody else is doing, because a lot of firms panic when
there’s turbulence or they sink into a defensive crouch and just try to minimize damage.
And if you’re looking around at the companies that are making inappropriate responses
and then copying them, it’s unlikely that you’re going to have a better outcome than they
do.
The Quarterly: So what’s the right way to respond? Where is the upside in turbulence,
and how do you grab it?
Don Sull: The upside is that turbulent markets are creating opportunities all the time.
They’re throwing new resources into the market. If you look at the rise of Mittal Steel,1
for instance, rapidly dwarfing a lot of the traditional steel players—they didn’t go around
avoiding turbulence, they went after the most turbulent markets in the world—Kazakhstan
and Indonesia and so forth—to see the opportunities there.
So [turbulence] throws out new resources. It shifts consumer demands. If you look now
in the current downturn, a lot of consumers have a lot less disposable income. You could
say, “That’s awful. For fast-moving consumer good companies, that’s bad news.” Well it is,
although some of the more nimble companies like Nestlé and Starbucks and McDonalds
are responding to those shifting consumer demands. McDonalds in Europe is opening its
McCafes and rolling them out quite aggressively, Starbucks has their instant coffee, and
Unilever has taken some products they’ve pioneered in emerging markets and brought
them into Europe. So [the fact that] consumer preference is shifting isn’t necessarily bad
news. It creates new customer pain and agile companies can meet those needs and create value.

Words from CEO> Throwing new resources into new markets is the key strategy for growth.  We are hiring a Portugese consultant – John to construct a new formula of coffee (combining Brazil and Africa coffees with a new taste for HKSAR locally) and plans the new coffee chain in the “The Centre” at the heart of HKSAR CBD. 

The coffee chain will be branded as “Emily33″ and co-worked with key speed dating operators namely (1) www.hkspeeddate.com (2) Coffee Matching (3) 214 matching.  The branded coffee “Emily33″ will be exported to PRC China in a penetrating pricing at RMB 3.3 and will be expanded with a franchising system with setup fee of RMB 330,000 plus annual management fee of RMB 33,000.  Each outlet will be equiped with Wi-Fi network free of charge and managed by English/Japanese/Korean speaking staff with hotel management background. 

The strategy links with the PRC national policy of increasing domestic consumption and shifting consumer demands for western products with relevant packaging (in a culturally appealing manner).  Of course, another chain for wine distribution will be planned for HKSAR only, not for PRC due to sensativity of the indusrtry as well as the complications in dealing with PRC administration.  The first bar of this type will be articulated with a World Class DJ such as Mr. Jordan Robert Laws plus advanced audio output system (www.AudioBaseHK.com).  The dancing floor will be operated by Filipino and Nepal staff (also security office).  Touch screen system by EBSPOS for accounting and billing. 

Pricing strategy:

1/ event based pricing for reputable organization: bar guarantee HKD150,000 for 300 persons for (1) DJ (2) Audio/Lighting systems (3) security officers for the whole premises (4) F&B – international cruises (5) transportations to key locations of HKSAR (from 5am to 6am) (6) operating hours (from 10pm to 5am)

Location strategy:

1/ ICC or other premises (about 6000 s.f).- next to high speed West Rail (targeting at 9+2 Greater PRD customers) – by 2011

2/ Nina Tower or other premises (about 9000 s.f) - next to Tusen Wan West Rail (targeting at NT West customers) – by 2012

3/ Landmark North or other premises (about 20,000 s.f) – next to Sheung Shui East Rail (targeting at NT North customers) – by 2013

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