04

03/11

Chinese Companies “Go Global”:3 Dos and 3 Don’ts for Chinese CEOs

7:03 pm by Mr. Wiseman. Filed under: Financial News
By Brion Tingler Today, China’s economy is taking the world by storm.  Her companies are stronger than they have ever been within China and they are hunting for growth opportunities.  For many companies, this will mean looking abroad and “Going Global.”   In this is a new era for China and her companies, there will be successes, and failures.  So what are some things a Chinese CEO should think about as he creates a global strategy and makes his company into one of the lucky and successful?  Below is a perspective on the situation and challenges, as well as 3 do’s and 3 don’ts to consider. First a bit of perspective. When I first visited China in 1998, one acquaintance could not understand why I would go to China for a summer vacation.  Even when I moved to Beijing in 2001, the year China joined WTO, nobody was thinking about Chinese companies “Going Global.”  During those first few years, I advised a number of multinational foreign companies on their domestic marketing and communications programs.  Then, people in my business and other service providers like bankers and lawyers, were almost entirely focused on helping US and European-based companies get a “lay of the land” in China.

What a difference a couple of years make! We’ve started to see a few brave Chinese companies take their first steps abroad. Lenovo’s acquisition of IBM’s PC business, Haier’s organic growth and brand-building in the US, the Bear-CITIC, and ICBC-Standard Bank deals are all great examples.

These companies were all front-runners in realizing that, to remain leaders within China, they also needed to expand abroad and study global best practices.  Today, it seems like every week another Chinese auto company says it’s going to be the next Toyota.

While the handful of companies mentioned earlier are at the leading edge of this trend.  Research by IBM and Fudan University has identified 60 Chinese companies with “global potential.”

Another important aspect of “Going Global” are the international IPOs.  In this year alone, 68 Chinese companies have IPO’ed outside of China raising more than $11 billion in capital.  Chinese companies are using their global IPOs, not only to raise money, but also to study best practices in business management, corporate governance and marketing communications.

While the Globalization trend for Chinese companies has begun, there are four groups of challenges as Chinese companies “jump into the sea.”

First, there are business cultural practices that will constrain Chinese companies

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