Longco: the challenges of growth

Interview with Peng XIAOLONG, president of Longco, holding a degree in French language and literature from Guanwai (University of languages and commerce located in Canton) and an MBA from E.M. Lyon

Precursor on an emerging market

In 1990 in Hong Kong, Peng Xiaolong, a Frenchman of Chinese decent, created Longco, an import and wholesale firm for automobile body tools and materials. At that time, the Chinese automobile market was still regulated and limited to large firms, as it only became possible to obtain a bank loan in 1998. In 2003, the market presented a growth rate of 60%. Despite a more difficult year in 2004, 2005 looks promising, as importation quotas are to be lifted. Longco now lists 1500 products. It has set up a network of resellers that covers the whole of the Chinese territory.

A demanding market

Relationships with local powers are time-consuming. As the field environment is extremely competitive, peer relationships are complex. As soon as a field becomes lucrative, large numbers of competitors quickly appear. “It’s true that they copy each other,” explains Peng Xiaolong, “but in copying, they adapt, and it’s the adaptation that is creative. That is the spirit of Deng Xiaoping, adapting to Chinese characteristics.”

Indeed, customers are both highly courted and among the most challenging, as they too must respond to a demanding market. They are thus even more relentless in terms of innovation, price, and reactivity. This means that intermediaries, wholesale importers like Longco, must constantly be on their toes and particularly skilled in:

•Tolerance and communication. The services they provide must correspond to customers’ demands, and problems must be handled well. There is a powerful contrast between European suppliers, for whom a year may not be enough to implement a modification, and their Taiwanese counterparts, who respond to changes by the following shipment.

•Adaptability. The market changes so quickly that companies must constantly adapt products, services, people, and organizational methods. They must continually solve problems, re-evaluate their way of doing things, and anticipate what is to come. It is very dangerous to take a break in the Chinese market. “If you fall behind, there’s no catching up; the message is crystal clear.”

Tough decisions and the challenge of growth

That’s what this market is like; its growing like a weed at a double-digit rate. Anything can be created and everyone is an inventor. “Opportunities are plentiful. Everyone—even customers—has a project to suggest. Many people can’t resist this temptation, but you have to. Entering the Chinese market requires being highly motivated and having a clear

objective. That is the only way to build confidence,” advises Peng Xiaolong. And therein lies the difficulty: playing by the rules of a “sink or swim” market without drowning