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Folklore about the Chinese market tells the tale of high-priced, self-selling German products bearing a black-red-gold sticker on their package that virtually fly into the arms of customers. The reality of marketing looks much more grueling. This is what Forest Liu tells us in today’s CEO Talk with Frank Sieren. Liu markets lenses and cameras in China for German manufacturer Arri. When the market was just starting to take off, competitors’ cameras offered superior technical specs on paper. Only through “agonizingly slow convincing” of film industry customers did Arri work its way up to become the market leader.
At times, it was tempting to offer high discounts as a sales incentive. For a while, even the company’s own sales department called for this. But Liu remained persistent. Ultimately, he succeeded in anchoring Arri’s cameras in the market as a premium product. One of the main factors of Liu’s success was that he understood both German and Chinese culture. Because in the initial phase, every sale required precisely the right arguments. He leaves the low-priced products that generate more revenue to the emerging Chinese competition, which is also constantly improving.
In technical terms, China simply wants to continue learning from the best. That is the reason why there currently is a race to find a wrecked aircraft in the waters near the Philippines. The USA has lost one of its state-of-the-art F-35 fighter jets there. A stealth jet packed with weapons. Even its anti-radar plating could mean invaluable tactical insights for the People’s Liberation Army. Michael Radunski analyzes the stakes in the race to the bottom of the South China Sea. The United States is trying to find and salvage the wreckage first. However, if the Chinese navy is faster, the US military will lose critical advantages.
Today’s guest feature is by Stephen Roach. While he is first and foremost an economist, his geopolitical assessments are also worth paying attention to. As a former top Morgan Stanley executive, he’s been around. Roach considers Xi and Putin’s friendly meeting during the Olympics as a historic turning point. Admittedly, he uses the rather bulky phrase “triangulation gambit”, which refers to a triangular chess move, to describe China’s strategy. In political discourse, it simply means that one superpower plays two others off against each other. The US once did this successfully with Russia and China. Now, Xi wants to be smarter. He is using the growing risk of war in Ukraine to strengthen his own position.
‘In China, they quickly say: we do this differently’
Forest Liu, 39, is the head of China for an astonishing German champion that has maintained its position as a global market leader across several technology shifts. The Munich-based company was founded back in 1917 and is actually called Arnold und Richter. It is known by the acronym Arri. With Alexa, the Arri Group, as it is known today, is the world’s leading manufacturer of digital film cameras and film equipment. Annual revenue exceeds €400 million. Liu has also played a crucial role in the company’s success in the People’s Republic. The German was born and raised in China. His mother Kosima Liu is a German photographer and artist, and his father John is an American documentarian of Chinese descent. Liu originally wanted to direct films himself after studying business administration. But he then had the opportunity to set up Arri’s first representation in China. His branch has developed into a huge market where Liu can pursue his fascination for German cutting-edge technology. You can watch the full German interview here.
How does a German company manage to keep its position at the top of the Chinese market for such a long time, even in the face of strong competition from the US and China?
Because they don’t sell fancy gadgets, but tools for craftsmen who produce movies. And in the way that many German hidden champions do: The world’s best products, without allowing themselves to be beaten down by price wars, all the while focusing on major trends, without letting themselves get side-tracked by every hype. What’s important: You can’t let your principles distract you.