Nothing says business thinkers like a military aphorism. Yet it is usually where they appear most apposite, namely price wars, that investors struggle to accept battle strategies, since not even victors emerge unscathed. Still, skirmishes within the campaign say much about the strengths of each player.
Take the fight among China’s internet retailers. Battle was joined last week by 360buy, Suningand Gome, with promises to undercut each other in home appliances. If successful wars need careful planning and precise execution, this looked messy and media-driven, not least since the aggressor, 360buy, scrambled to restock hot sale items. But 360buy, which pledged such investor no-nos as zero gross margins for three years, probably had a different purpose that made longer-term sense – disrupting the online growth of Suning and Gome. They are bricks-and-mortar players; 360buy is a pure online merchant.
So its promise to hire 5,000 store-visiting price watchers was less eyebrow-raising than it sounded, especially if it can curb its rivals’ ability to offset market share-grabbing online deals with higher store prices. Followers of Sun Tzu, who has outmanoeuvred Carl von Clausewitz in business thinker popularity, know that warriors must appear strongest where they are weak and vice versa. Rumours of strain at 360buy – its plans to list change as quickly as its online prices – have been denied. Its weakness is its need to grow its top line, since without profits, revenues are its main selling point.