Saturday, April 7, 2007

Rittenberg on IBM PC's arrival in China

I interviewed Sidney Rittenberg back in 2005 for story on selling in China after reading about him in the NYT. A Charleston, SC-born octogenarian, Sidney has lived an amazing life. He was in China at the end of WWII, when he hooked up with Mao and his Army. Sidney spent the next 35 years in Communist China, where he witnessed the workings of Mao and his regime and was twice imprisoned for a total of 16 years (once after Stalinist Russia accused him of spying and once during the so-called Cultural Revolution). Then in 1980, he returned to the US, where he wrote a memoir and naturally, became a leading consultant on doing business in China -- he still advises major companies that hope to tap into that nation's huge markets.

Sidney says the number one mistake companies make when attempting to enter China is that they expect to do business as usual. He told me this cautionary tale about IBM's PC unit and its initial foray into China:

When IBM set up the PC company in the early 80s, they went into Beijing and they leased two floors of the Great Wall Sheraton Hotel, which was the biggest hotel in town in those days. (Immediately all prices for foreigners in Beijing went up. So that didn’t make the foreign business community very happy.) Then they literally sat in their hotel suites waiting for the Chinese to call them on the phone and order computers.

I know that from personal experience because we were consulting to ComputerLand, which was then the biggest retailer of PCs in the world. The then president of IBM China actually told us, he said, "We think PCs should be sold by gentlemen in white shirts and dark suits and we are not going to go slogging around through the mud in China to sell them." So, they were just like a basket case.

Then, the most hilarious thing was in 1984 I think. They finally realized that they needed to train Chinese computer salespeople and service people, so that the Chinese could set up their own computer stores because there were none at the time. We got a notice that they were holding the first training session in Beijing and it was going to be on October 1st. So, my wife called them and said, "We wondered if you noticed that October 1st is National Day." It was a total holiday and there was a big parade and nobody was going to show up for a training session.

These are all symptoms. They made a great effort, they spent a lot of money, and a couple of years later, they dismantled the PC operation and went home.
Interesting that 20-odd years later it was Lenovo, a Chinese PC maker, that bought IBM's PC business.

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