Weekly Business Insights

Most news on China’s manufacturers is bad news for rivals around the world. Foreign governments fear their domestic champions will be pummeled by low-cost Chinese rivals. But on August 5th the world got a small reminder that China’s producers face big problems of their own. Hengchi, an electric-vehicle (EV) maker owned by Evergrande, a failed property developer, told investors that two of its subsidiaries had been forced into bankruptcy. The group originally aimed to sell 1m EVs a year by 2025; amid feverish competition it sold just 1,389 last year.

The glut in industrial production is not limited to EVs. About 30% of industrial firms were loss-making at the end of June, rising above the previous recorded peak during the Asian financial crisis in 1998, according to the National Bureau of Statistics. Its survey of more than 500,000 companies shows a startling deterioration in the conditions for industrial firms in the first half of the year, during which the number of loss-making companies surged by 44%.

In recent years handouts, cheap loans and direct government investment have poured into areas of manufacturing favoured by Xi Jinping, China’s leader, with some remarkable outcomes. On his watch China has become the world leader in EVs and lithium-ion batteries. But its economy is weakening and consumption is sagging. The Economist has examined three of Mr Xi’s most-favoured industries: EVs, solar modules and semiconductors. The picture that emerges is grim.

Start with EVs. At least eight large makers of the cars have shut down or halted production since the start of 2023. The ripples are visible throughout the supply chain. Some 52,000 EV-related companies shut down in China last year, an increase of almost 90% on the year before, according to one estimate.

China’s solar industry is also grappling with oversupply. This year the prices of most components of solar modules have fallen below their average production cost. Many companies in the industry are scaling back manufacturing. Others have scrapped plans to enter the market. The greatest pressure in solar, as with many other manufacturing industries, is among smaller suppliers that have watched the profits they make from their components disappear.

A shakeout is occurring in the semiconductor industry, too. Local governments have focused their investments on low-end chip components in an effort to “easily win market share”, notes an industry insider. Those parts are now in great oversupply and many of the companies producing them are failing. In 2023 nearly 11,000 chip-related firms went out of business, roughly 30 a day, according to Qichacha, a company that collects corporate data.

China’s central government has started to recognise the pressure the country’s manufacturers are under. Mr Xi recently acknowledged over-investment in some green technologies.  Yet it will be difficult for China to avoid a period of industrial involution. Mr Xi’s overriding ambition has been to create high-tech champions across a number of industries that can win in global markets and break his country’s reliance on foreign intellectual property. State support for this has generally flowed through local governments, many of which have spent indiscriminately, resulting in legions of small and uncompetitive suppliers.  The state has started to encourage consolidation. But that will not be straightforward.

The poster child for India’s liberalized banking sector is joining the ranks of the world’s largest companies. Mumbai-based HDFC Bank is fresh off last year’s $40 billion merger with its parent company—a somewhat risky move, but one that reflects the bank’s confidence in the continued strength of the Indian consumer class that fueled the rise of both companies. 

The bank debuts on the Fortune Global 500 at No. 306, with $49.3 billion in revenue for the 2023 fiscal year, almost double the figure for the previous year. It’s the only wholly private bank from India on this year’s ranking; State Bank of India, owned by the country’s finance ministry, is at No. 178. 

When India started to liberalize its financial sector in 1991, HDFC was one of the first to apply for a new license. A sterling reputation gave it leverage in talks with India’s central bank:  regulators let HDFC set up the head office of its new bank in Mumbai, the country’s financial center, despite rules requiring geographic diversity for “new age” banks. That created two separate, yet intertwined, financial giants: HDFC, which grew to be India’s largest mortgage lender, and HDFC Bank, which offered checking and savings accounts and all the other elements of consumer banking.

HDFC Bank has 93 million customers, more people than the entire population of Germany. With almost 8,800 branches, it has a larger physical footprint than Bank of America’s and Wells Fargo’s U.S. networks combined (albeit with only 17% of their combined revenue). HDFC Bank is also India’s largest bank by market capitalization, at $145 billion in mid-July. 

Its size is, in part, the fruit of staying focused. As other banks chased trends like lending to infrastructure projects or telcos—and got stuck with bad loans—HDFC Bank focused on providing retail financial products to an army of consumers, building a reputation for credibility and consistency in India’s sometimes rough-and-tumble banking world.  “The public sector banks had the customers and the deposits, but they didn’t have great products,” Param Subramanian, an analyst at Nomura, recalls. Under Aditya Puri (HDFC Bank’s first chief executive), HDFC Bank pioneered products like personal loans and credit cards for India’s consumers. 

That conservative approach has served the company for 30 years, growing it from a tiny bank with $38.6 million in revenue for 1995 into the conglomerate it is today. And now the bank is even bigger. Last July, HDFC Bank, now led by CEO Sashidhar Jagdishan, completed its merger with HDFC, its parent company.  The $40 billion deal was the largest merger in India’s corporate history.

Benefits are the desirable outcomes that customers receive from your brand. This definition holds true regardless of whether customers are in B2B or B2C spaces and whether the organization is a company, nonprofit, or sole proprietor offering a product, a service, or an experience. Benefits help customers reach their goals and reduce their pains.

Focusing on the benefits customers genuinely want offers a straightforward path for companies to design, market, and deliver their products and services, and to grow strategically in ways that resonate deeply with their target customers. For marketing executives, this path is also highly actionable: A focus on customer benefits lets a company examine its entire set of strategic decisions through the lens of benefits. Here are seven compelling reasons why customer benefits should be a central concern of your company.

1. To avoid marketing myopia. Marketing myopia happens when organizations focus on a product, industry, vertical, or demographic instead of the benefits that customers want.  Companies that regularly look to understand the benefits their customers want and that are willing to reexamine their business practices are less likely to get blindsided by market evolution.
2. To identify potential competitors.  Focusing on customer benefits changes your perspective on where prospective competitors might come from, especially with regard to the threat of new entrants and the threat of substitute products.
3. To see paths to growth. A benefits perspective helps companies grow by extending a given benefit to a new product category or providing different types of benefits. Functional benefits provide solutions to problems so that customers feel that they have the efficacy to control their environments.  However, customers also value experiential and symbolic benefits. Experiential benefits engage customers’ senses, minds, and hearts, inducing feelings such as excitement, sensory pleasure, engagement, relaxation, or awe. Symbolic benefits enhance people’s feelings of belonging, status, or connectedness, or that they’re acting in a values-congruent way.  Many companies, if they focus on benefits at all, emphasize functional benefits and give short shrift to experiential and symbolic benefits. 
4. To develop new products. A benefits focus also facilitates new product development. When ChatGPT took off in the mainstream market in November 2023, the benefits were not new. Natural language processing and artificial intelligence technologies had been around for years, in products like Apple’s Siri and Amazon’s Alexa, for example. However, ChatGPT launched with a website that promoted the functional benefits of ease of use, increased productivity, and humanlike interaction.
5. To understand shocks and trends. Shocks are events that can affect what benefits customers want or how important existing benefits are to them. Shocks are like earthquakes: They send out tremors that rattle the status quo.
6. To help companies financially. When companies offer the functional, experiential, and symbolic benefits that customers want, customers are more likely to become loyal to the brand and advocate on its behalf.
7. To help develop core competencies. Focusing on customer benefits is also consistent with work on an organization’s core competencies. Core competencies assist an organization in distinguishing its brands from those of its competitors and reducing costs more than competitors do, thereby attaining a competitive advantage.

According to the author in his early experiences as a business executive and adviser, he has often seen new business investors focus primarily on the strengths of the management team, or a sustainable competitive advantage. In reality, these are core attributes for every funding equation, and while these are necessary, they may not be sufficient to make your new venture the total success embodied in your vision.

In the past few years, the author has been seeing a renewed focus on other less tangible attributes that can set your new business apart. Examples include the conscious capitalism movement, the B Team,, and the Benefit Corporation (B Corp).

According to the author he has always struggled to communicate the multiple other relevant priorities, and the other intangibles required for a great execution. He found many of these in the classic book Great From the Start: How Conscious Corporations Attract Success, by John B. Montgomery, which does a great job of laying out specifics and case studies.  It also starts with a good summary of the intangibles, summarized as the five rules of relevancy, by Mark Zawacki. If you aspire to start your own business or look to join a new venture, you need to heed these recommendations:

1. A business needs to be relevant and stay relevant. Relevancy for a new venture company is the discovery and understanding of the real addressable market for a product or service. This is not the total opportunity out there, and not the total target market, but the subset of customers who have and will spend the money you need to cure their pain.
2. A business needs to find a voice relevant to its ecosystem. These days, you have to foster a community of support for your business. That means educating targeted supporters is key, even before you start to sell. Selling too early triggers customer defenses and drives them away. Everyone hates being sold to; we all prefer to buy. 
3. A business must gain balanced traction. This is not just sales traction, but a proper balance between resources, product, and customers. It means building a viable and desirable product before selling, assembling the right team with funding, and recruiting and educating enthusiastic customers who will be your best advocates. 
4. A business must form alliances within its marketplace. Today’s ultra-competitive global environment demands that you make alliances early. New ventures often pay lip service to strategic partnerships, but then schedule these efforts far down the road. The right partnership strategy early can make and keep a company relevant.
5. A business must maintain a relevant laser focus. Too many early-stage companies are so desperate for customers that they operate in a frantic and random sales mode. They sell into multiple verticals, or pursue multiple revenue streams, such that they can’t develop a repeatable, scalable sales process, and don’t do anything extremely well.

For many leaders, assuming the role of CEO is a key career goal and the culmination of decades of hard work. The CEO role is also among the most challenging and demanding positions in any organization—particularly during times of uncertainty and upheaval.   Often, these uncertainties are rooted in one or more of five common dilemmas. Each dilemma concerns a time when CEOs are required to strike a balance between multiple desirable outcomes, which may be—or appear to be—incompatible. 

1. Preserving the core while innovating for the future.  A CEO can pursue thoughtful and strategic innovation to grow the company without taking excessive risks, while honoring its history and preserving assets, value, and a legacy of success.
2. Delivering short-term results while investing in long-term performance.  Where short- and long-term goals compete, CEOs that opt to steer a steady long-term course may be positioned to withstand other pressures. Building and maintaining wider support in the chosen long-term strategy can help CEOs navigate pressure.  In many cases, however, short- and long-term goals can be distinct or even self-reinforcing.
3. Managing a team of individual stars versus maximizing collective performance.  A key could be anyone who significantly compromises the organization’s values must be let go even if they are a star performer—and ideally, in a very visible way so the organization gets the message.
4. Empowering others while maintaining control of outcomes.  CEOs can decide where to retain control and where to delegate based on the specific context.
5. Becoming fully immersed in the CEO role while retaining personal identity and sense of purpose.  Tips and tricks aside, the CEOs who said they had achieved a balance shared a common attribute: they had found their North Star. Having a sense of mission enabled them to maintain balance, clarity, and purpose.

The following takeaways may help CEOs and aspiring leaders navigate the inherent challenges of their roles:  embrace a ‘both/and’ rather than an ‘either/or’ mindset, find your support network and allow yourself to be vulnerable, continually reassess your priorities and keep an open mind, and carve out regular time to reflect and reconnect with your mission.

After a few years, even the most exciting job can start to feel a bit routine. It can happen even if it’s the dream job you worked so hard to land after doing countless interviews and pre-hiring tests.  Feeling stuck can sometimes impact your productivity, leading you to consider new opportunities by scrolling through job boards. While job hopping could be good strategically to get ahead in your career, it’s important to be intentional about making a switch, especially in today’s competitive job market.  So before handing in your resignation, here are some options you should consider if you’re feeling stuck in your current role.

1. Try To Understand Why You’re Feeling Stuck.  Feeling stuck can come from a variety of factors. It’s common for people to experience this, especially when they’ve gained a strong grasp of their role. This can lead to a daily routine that feels almost automatic and lacks the intellectual challenge it once had.   But the same thing can happen even in high-stakes environments, where heavier workloads can feel overwhelming. But whether you’re just bored or overwhelmed, it’s worth asking yourself if your current role still aligns with your values and long-term goals.  Take some time to reflect on what’s missing or causing you dissatisfaction.
2. Review Internal And External Options.  Once you’ve identified why your motivation has dipped, it’s helpful to explore whether the solution lies within your current role or if it’s time to consider other options.  Sometimes, the fix can be as simple as a change of pace. Humans are generally creatures of habit, so doing things in the exact same order each time can give you a sense of stability, but may also make things feel too predictable.  If this feels familiar, go for shaking up your routine.  If you want to take it up a notch, you can look into working with different departments where you can bring value and dive into new projects that push your limits. This means showing up more to pitch fresh ideas and volunteering for tasks beyond your usual scope.   If you’ve tried all of these and are still in the same position, this might be the time to look for options elsewhere.
3. Give Yourself Grace And Be Patient. Once you’ve made the necessary changes, it’s helpful to be patient. Changes can take time in any company, and that’s okay! If you’ve decided to make changes internally, it’s important to give the process time to unfold.  But if you’re exploring job opportunities elsewhere, the wait could be a bit longer.

According to the writer, when she received a new bicycle from her grandparents as a kid, her mother wouldn’t let her out of the house to take it for a spin before she sat down and wrote them a thank-you note. She remembered grumbling over this at the time, but thank-you notes have since become her passion.

This is a smart leadership approach. Showing appreciation and recognition to those who deserve it works to engender enthusiasm, hard work, and loyalty. When you look at lists of companies with the lowest turnover rates, “positive environment” is one of the key reasons people stay — right up there with pay and benefits. No better way to create a positive environment than showing your gratitude.  So how do you do it well? There are five principles the author has learned about effective thank-you notes.

1. Take time to reflect.  In matters of the heart, speed is rarely a virtue. Before you put pen to paper (or thumbs to text), think about what you want the recipient to know, what sentiment you want to linger, and how you hope they will feel after reading it. It can be hard to find that time in a busy schedule, so it can help to regularly set aside a few minutes or an hour.
2. Thank those who are often forgotten.  Take the time to express your gratitude to those who may feel taken for granted. That could be writing notes to the workers in your manufacturing plant, the security guard in your lobby, or a child who left a piece of her artwork on your desk.
3. Be specific.  The best notes are detailed. Don’t just dash off a thank-you note for dinner; extol the details and include something that influenced you.  It should be more than writing thank-you notes, it’s acknowledging success and things well done. Do it in a way that is very personal to you and very personal to the person you are writing to. Make sure it doesn’t sound canned. Make sure it comes from the heart.
4. Make it matter.  When any expression of thanks has impact, it has done more than express gratitude — it educates and clarifies, illuminates or incites passion. Offer something of value, an insight, or a piece of information.
5. It’s never too late.  Even if the gift came six months ago or longer, it’s better to write the note than not. Apologize for being tardy, move on without further excuse, and express your feelings. The recipient will appreciate it and forgive your lateness on the spot. That’s even more true if the gift isn’t a tangible one: It can take years to fully realize the impact of a person on your life. Don’t let this stop you from expressing your gratitude. Make it part of your routine to consider if there is anyone to whom you owe a thank-you letter.

No business owner wants to face failure, but sometimes despite their best efforts, a business model just does not work out as planned. But failure does not have to be the end of the road. With some determination and a willingness to think outside the box, it is possible to turn things around by reinventing a failed business idea. It’s also important because reinvention allows you to learn from past mistakes, gain new insights and emerge stronger with an improved strategy.  Here are a few tips that would help your business pass through the bad phase.

1. Analyze what went wrong.  You need to thoroughly look back at what has not been working. You will need to closely examine every aspect of the business from top to bottom to understand what exactly caused it to fail. With an accurate diagnosis of what has not been working, you can then determine the right areas to focus the reinventing efforts on.
2. Modify the core offering.  Once you have identified issues with the original product or service, consider revamping or replacing the core offering. This may involve tweaking features, changing designs, improving quality, switching to a new delivery method and more
3. Overhaul the target audience.  It is also important to review whether aiming at the wrong customer segment is hampering your success. To correct that, you need to look for new demographic, psychographic or geographic groups that may be a better fit.  What is key here is your market research; it will help you identify an optimal new target.
4. Rethink pricing strategies.  Pricing problems are a frequent culprit in business failures. If you think this might be a major issue, consider altering price points, adding package deals and offering discounts. You can also think of implementing new payment options to make the business more affordable and accessible.  Being flexible and creative with how customers pay for products and services can open new doors. For that, you need to do your market comparisons first to ensure any new pricing is competitive and reasonable.
5. Streamline operations.  Inefficient or cumbersome internal procedures could also be draining time and resources away from growing the business. Look for ways to simplify workflows, delegate tasks, improve organization, speed up processes and reduce expenses involved in day-to-day operations.
6. Overhaul marketing strategy.  Another crucial area for reinvention is marketing. You will need to reassess your target messaging, advertising platforms, branding, social media presence and all other promotional avenues. Outdated or ineffective marketing is clearly not helping to improve sales and growth. 
7. Consider partnering or franchising.  Looking into partnerships, alliances or franchising models could open up new revenue streams and expansion opportunities to reinvent sluggish growth.  When one business model is not working well independently, joining forces with others can take a concept further and fast-track your efforts (with built-in support systems).
8. Accept needed changes.  Sometimes more drastic changes than anticipated are necessary to really turn things around from failure to sustainable success. Be open-minded and willing to overhaul aspects you may have initially thought were unchangeable if the reinvention process clearly indicates a major shift is required.  Having a “whatever it takes” mentality will definitely help you get unstuck!