BIZCHINA> Top Biz News
|
BIZCHINA> Top Biz News
|
|
Global march of Chinese companies
By Pedro Nueno (China Daily)
Updated: 2009-10-01 07:30 We live in a global world, and Chinese companies can contribute a lot to this globalization. It is true that today, we see many more Western brands in China than we see Chinese brands outside China. And, in the long run, it may be difficult for the Chinese economy to achieve a position of leadership in the world if China's domestic companies do not become international players. There are examples of Chinese companies - Haier, Huawei - that are proving that this deployment can be undertaken, but the examples are very limited. We read in the press that in some Western countries, Chinese exports are penalized and Chinese investments are stopped by importing governments - including recent efforts to block China-made tires from being imported into the United States and block Chinese investment in raw materials in Australia. These cases are true, but we must remember that if one day the weather is always good, all people are honest, stock prices only go up, and there are no traffic congestions, we may stop reading the press. We need some bad news in order to read it. In other words: We must remember that Chinese investments are also welcome in many countries, as long as they contribute to the well being of these countries. Chinese investments may even receive government support, as we see in some cases in Europe and the US. An American working for Novartis (Switzerland) is as proud of his job as a European working for Pfizer (USA). A German working for Danone (France) will feel as comfortable as the French working for Siemens (Germany). A Spaniard working for Microsoft in Europe would feel as happy as an American working for one of the Santander Group banks in the US. Chinese companies should become world employers. The day that Chinese companies going global begin to employ a relevant number of Americans and Europeans, they will be seen in their host countries as local companies - companies to be helped and protected.
Becoming a global player is a complex management process but there are examples of success and failure that Chinese companies can learn from. There is also a lot of knowledge available in lists of what works and what does not work. When I read not long ago that a Chinese company showed interest in acquiring troubled Opel, the European subsidiary of almost bankrupt General Motors, I thought: "What a crazy idea!" Opel needs an important restructuring that will involve labor adjustments and perhaps plant closures. The process will be on the front page of newspapers and TV news worldwide for months. Workers are likely to protest and even organize strikes in Europe. Ministers of one country will visit ministers of other countries to negotiate plant closures at the political level. This would certainly not be the best way for a Chinese company to make its first relevant step into the world outside China. The company would face hostility from unions, workers, and the public - and it is unlikely that the company would receive any government support from Europe or the US. On the other hand, we have also recently seen countries competing to attract foreign companies. One example is India's Tata, which finally has decided to build a plant in the UK that will manufacture an electric car. If a Chinese car manufacturer decided to build a new plant in Europe, creating jobs there, I would not be surprised to find governments competing to attract this project, and even offering to finance the plant construction through a public agency so that the Chinese company pays only rent. Governments (national, regional, municipal) in Europe and the US use many mechanisms to attract investors. They offer direct soft loans to finance investments, direct grants (per job created, to help expatriates, for training, for R&D), favorable taxation, and special location "zones" boasting well-developed infrastructures. The crisis-related problems in Europe and the US may represent an opportunity for Chinese companies to land there. But they should land with absolute control of their landing. If they buy a company, better to buy an SME that does not require a dramatic turnaround. If they build a new plant, better be moderate and advance quickly, module after module. It is also critical to choose the right landing location, one that offers: a good port, good logistics to markets, industrial infrastructure (suppliers, universities, laboratories, training institutions), reasonable costs, and government help. Some Chinese companies believe that Africa and Latin America are the "real" opportunities now. This may be true; we do see progress in these regions. But Africa and Latin America also carry a high degree of political uncertainty. Many companies feel the pressure to be the first in, and are eager to conquer these markets. But savvy companies also know that the real examination, the "doctoral degree" on internationalization, must be obtained via success in Europe and the US. Today, Chinese companies are in a unique position. They can now secure funding for international projects. They can also find and hire excellent professionals capable of working worldwide. At present, many Chinese companies have reached international standards with their products and processes. What we need most now from Chinese companies is the commitment to internationalize their talent pool, by creating jobs in the countries they seek to enter. By following this simple rule, Chinese companies with global ambitions will enter a new era of opportunity. The author is the Executive President, China Europe International Business School. (For more biz stories, please visit Industries)
|
