The Bigger Picture

Anyone familiar with office politics is familiar with the phrase that sounds something like “you only see what you are in charge of, but the higher-ups are in charge of the bigger picture”. For employees, this could be frustrating, as it devalues everything they contribute. However, if we delve behind slogan and actually look at its logic and the supporting evidence, we can see that many times the boss may be right.

Take the case of Newegg, for example. A once prominent B2C site, Newegg has lagged behind its Chinese competitors and it’s no longer considered a serious contender for the future.

The article and the people the reporter interviewed blamed the failure on the bureaucrats running Newegg back in America who didn’t appreciate the Chinese B2C market. Newegg’s honchos wanted to make money and expand simultaneously. This may be possible in the U.S., but with an inadequate infrastructure, Chinese B2C is still in its early stage. None of the B2C giants is making money right now, this fact alone should’ve warned Newegg that a bigger market share without incurring loss.

Yet Newegg has consistently refused to do the Charles Prince dancing bit since it entered the Chinese market in 2001. As Newegg is not a publically traded company, we don’t really know its thoughts on China, and we can only observe its China strategy through various reports by the media. While the company claimed to be betting on growth in China and has gotten a head start, it has never respected the key differences behind American and Chinese markets.

What can we conclude from this contradiction? If we adhere to theories of behavioral economics, then we must believe that action speaks louder than words. Based on the evidence, it seems that Newegg want to have its cake and eat it too. By believing it could simply waltz into the potentially huge Chinese market, not observe local business conditions, and make money while it expands, Newegg really didn’t give itself much of a fighting chance.

This is hard for Newegg China to swallow, of course, as it was dealt a bad hand and had to complete an impossible task. Furthermore, the staff was also given a courtside seat to watch a golden opportunity pass by without being able to do anything. Yet Newegg headquarters may not have the same feeling. Maybe all they wanted was to take a flier on the Chinese market on the cheap; if it works out, Newegg makes out like bandits, if it doesn’t, Newegg is at peace as well, since the bet was small anyway.

“Timing” is fairly important when coming to business. Doing the same thing in different situations have different implications. Newegg missing out on China is not like Yahoo killing Flickr or Google killing Slide, it never considered the Chinese market to be a game changer. Newegg wanted to take a tried and true strategy from America and implement it in China, and it didn’t want to lose much in the process. So basically, they wanted to try its approach and see if it sticks, if it doesn’t, then so be it.

We still have to wait until the game’s up to judge whether this is a prudent choice. Even though it has been 11 years since Newegg entered China, we still don’t know if market share in the Chinese B2C market means anything. So far, it has been more market share, more losses. Maybe in the end, Newegg’s approach will prove to be smart after all.

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