GroupMAV

The distributor I interviewed was giving away all his remaining inventory. His sales had gone from tens of thousands of dollars in 2019 to nothing in 2021. He was winding the business down. This distributor was selling the product that my client was preparing to enter China with. I had been asked to map a China market entry for a company that pulled drinking water out of humid air. The published market data described a substantial, growing market. The dominant player was citing China revenue in the tens of millions of dollars, and the rest of the industry was repeating the figure. That distributor was not an outlier. The dominant player had closed two of its four factories and was redirecting to export markets, where the product was actually needed. Three of the four largest manufacturers were selling ninety percent of their output abroad. Local distributors were exiting outright — one told me plainly that this product segment could not be developed. The pattern was the same: manufacturers were pulling back from the Chinese market to sell overseas where the demand was. Local distributors were leaving the market for good. These were domestic manufacturers with every advantage my client would not have: a lower cost base, existing channel relationships, and government access. They were turning away from the China market anyway. The clearest signal a market can give. When the incumbents best placed to win are walking out, an entrant without their advantages should not be walking in. The diagnostic report said do not proceed. The client read it, weighed it, and set it aside. I do not think they ignored the work. They were already committed — to the plan, to the spend, to their own version of China — and reversing that would cost them more than disbelieving a report. The facts did not match the decision, but the decision still held. In the years since, the company still hasn't built a meaningful presence in China. It did, however, build one in the same markets the Chinese manufacturers were turning to — water-scarce geographies the report had named as the place the product actually fit.

I toured the site with him at six in the morning — he wanted to show me the factory floor before the staff came on shift. He walked me through the operation and spoke plainly about what it had taken to get it running. He had taken over the China business after a JV separation, with no prior China experience and no handover. The former partner was still operating on the same plot of land. There had been theft of raw material. Threats of violence. Staff that had been split by divided loyalties, which he was still cleaning out. He had walked into all of it cold and brought the operation back to working order. By the time I arrived, the factory ran, and ran well. He had paid a personal cost for it; headquarters had given him little recognition, and even less support. I was there because he wanted out. Headquarters thought the business was in good shape, and they were right that it was — they were wrong about why. It appeared to be in good shape because he was still holding it together against all odds, but it was not stable. They were still discussing the requirements for his replacement. Do they need an expat with China experience, relevant industry background, or perhaps a local hire who knows the culture? The man who had actually done the job had none of those things. He had walked onto a contested site with none of the credentials they were now debating, and done what none of them could have. I have seen this pattern enough times to recognize it. When leadership cannot see what is happening inside an operation, it reaches for the fix that sits closest to hand — the one that feels familiar and safe. Here, that fix was a hiring profile. China experience. A local hire. The right background. A requirement standing in for the knowledge they did not have. The replacement's profile was never the problem, and it was never the solution. The problem was that headquarters did not know the real condition of its own business. They never toured the factory floor at six in the morning — and a business you do not understand is one you cannot staff, cannot fix, and cannot keep. They thought they had a hiring decision in front of them. What they failed to see was proof that they were no longer in control of their company.