5 Points globalizing Chinese companies miss - Joel Backaler

+Joel Backaler 

Going global is not easy for Chinese companies, and most of them are not prepared to enter markets outside China, tells author Joel Backaler of China Goes West: Everything You Need to Know About Chinese Companies Going Global at Knowledge CKGCB. Most are losing out on five points.

Joel Backaler:

When you are looking at the developed markets, the vast majority of Chinese companies aren’t ready. There are five relations that Chinese companies need to master or deal with effectively. First they need to understand how to interact with the government. That’s not just within the overseas market but also here in China. For Chinese companies to go global for the first time, they may need to interact with the NDRC (National Development and Reform Commission), MOFCOM (Ministry of Commerce), or SAIC (State Administration for Industry and Commerce of the People’s Republic of China) if they want to get their money outside China. It’s very complex. For a company that isn’t fairly large in size, it can be very difficult to understand how to navigate that system, what the right path is. 

Additionally, when Chinese companies go to the US or Europe, they tend to rely on the government to give them more direction as to where to invest. They are finding that the only way to get that insight is through relying on professional services firms, be it tax advisors, management consultant or accountants: people know how to play by the regulations in these different markets. Oftentimes Chinese companies want to continue that government relationship model as they do here in China. 

The next thing is their relationship with their employees. As you look at any company when they go overseas, there tends to be a need to balance between a centralized organization and a decentralized organization. So how do you maximize the fact that you have a global company but also the fact that you have people on the ground that can respond more quickly to change? In addition to needing to empower individuals on the ground, Chinese companies need to have people back at headquarters that have global perspectives and are able to manage expectations across the organization for overseas business. 

The other factors are the relationships with consumers and communities, to overcome misconceptions, to know how a Chinese company operates. The last relationship is with capital. Chinese companies need to make sure that they are investing for the long term, investing in their employees and incentivizing them appropriately.

More at Knowledge CKGSB.

Joel Backaler is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´request form.

Are you looking for more experts on China´s outbound investments at the China Speakers Bureau? Do check out this recent list.

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Pros and cons of Chinese companies going west - Joel Backaler

+Joel Backaler 

Author Joel Backaler of China Goes West discusses at ´Thoughtful China´ the pros and cons of Chinese firms going west. Not surprisingly, Chinese companies make many of the mistakes foreign firms made when they entered China.

Joel Backaler is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´ request form.

Are you looking for more experts on China outbound investments at the China Speakers Bureau. Have a look at this recent list.

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China´s competition goes abroad - Joel Backaler

+Joel Backaler 

Domestic competition has become one of the major challenges for foreign companies in China, tells author Joel Backaler at the Carnegie-Tsinghua Center in Beijing. And those challenges now prepare to go global. A few summaries from his speech.

Joel Backaler:

A Changing China: Backaler explained that China’s reputation as the world’s factory is changing due to its growing domestic consumer market. Western companies in China now face competition from domestic firms in China. Backaler noted that 41 percent of China-based multinational executives he interviewed listed intensified local competition as a top concern in 2014. The increasingly competitive domestic market in China is why Chinese companies are now looking West. ... 

Next Steps for Chinese Companies: Backaler recommended that Chinese firms delegate more autonomy to overseas branch offices in order to establish stronger relationships with overseas employees. In addition, Chinese companies should invest in public relations to improve the image of Chinese companies and Chinese products. Public relations will also enable more strategic marketing and branding in order to increase the name recognition and brand strength of such companies.

More at the Carnegie-Tsinghua report.

Joel Backaler is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´request form.

Are you interested in more speakers at the China Speakers Bureau, focusing on China´s outbound investment? Do go to this recently updated list.

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Challenges for Chinese companies going global - Joel Backaler

+Joel Backaler 

Author Joel Backaler of China Goes West: Everything You Need to Know About Chinese Companies Going Global just returned from a book tour in China. On his website he summarizes a few observations, for example the fears of Chinese companies going global.

Joel Backaler:

My last speech in Beijing was at the Cheung Kong eMBA program which highlighted the Chinese side of outbound investment. The vast majority of the 80 attendees were C-level executives from top Chinese firms pursuing their MBA primarily to learn how to globalize their businesses. After a keynote speech to open up the session, I was joined on stage by a senior vice president from the Chinese firm TCL, a consumer electronics firm. We discussed the topic of outbound M&A and the many challenges that Chinese companies tend to face in the process. My counterpart from TCL described many of the challenges I wrote about in my book based on his own experience buying firms in the US and France. He expressed concerns about over-paying for acquisition targets, challenges along the management visit stage and difficulties incorporating global executives into his Chinese organization.

More at Joel Backaler´s website the China Observer.

Joel Backaler is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´ request form.

Are you interested in more experts on outbound Chinese investments at the China Speakers Bureau? Do check our latest list.  

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How should corporate America respond to China´s arrival? - Joel Backaler

+Joel Backaler 

Author Joel Backaler of the recently published China Goes West: Everything You Need to Know About Chinese Companies Going Global tells in the Business Monitor how corporate America can react on Chinese companies coming to them.

Joel Backaler:

The answer to this question varies depending on whether an American firm is considering new ownership, seeking new partners or responding to new competitors from China. 

For American companies seeking strategic investment, Chinese ownership presents an alternative to the traditional routes of private equity investment or acquisition by a larger domestic industry incumbent. The identity of the ultimate decision-maker is a top concern among firms taking on private-equity investment. Under private-equity investment, the CEO has to answer to the representative assigned by the private-equity firm. Chinese ownership can remove this concern from the equation. 

For American firms partnering with Chinese companies, access to new international markets is an obvious gain. In theory, this sounds like an ideal relationship: The American partner possesses a world-class brand, while the Chinese partner brings capital and new market access. But what are the broader implications for industry standards? Western companies should consider the long-term implications of partnering with Chinese firms, in particular the issues of intellectual property and technology transfer. 

Finally, a common misconception about Chinese investment in America is that the corrupt business practices that may be present in the Chinese firm’s domestic operations will simply carry over to the US This assumption is false. When a Chinese company operates in the US, it must do so in accordance with local regulations—or else face the legal consequences.

More in the Business Monitor.

Joel Backaler is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´ request form.

Are you looking for more speakers at the China Speakers Bureau on China´s outbound investments? Do have a look at this recent list.

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Rejoice: China investments are bigger than those from the US - Joel Backaler

Joel Backaler

For the first time, Chinese investments in the US were larger than US investments in China, announced the US Chamber of Commerce in April. About time, writes China consulent Joel Backaler in TealeafNation. "Americans worry that China is buying up the world. But there’s another, better way for U.S. authorities, businesses, and citizens to approach the influx: Embrace it."

Joel Backaler:

First, Chinese firms bring a great deal of cash to the table. Chinese global outward investment reached $85 billion in 2013, $14 billion of which ended up in the United States. A potent example illustrating the positive side of Chinese investment can be found in Michigan-based automotive steering firm Nexteer. During the global financial crisis, Nexteer CEO Robert Remenar targeted Chinese investors for his faltering firm. In 2010, he found a new owner in Chinese company AVIC Automotive, a state-owned firm, which bought Nexteer for $465 million. Under the new ownership, Nexteer’s CEO retained his entire management team and his decision-making authority, and was able to revitalize the company in a few short years. In December 2013, Nexteer’s president and global chief operating officer, Laurent Bresson, told local media that the firm was in “extremely rapid growth mode.” In the two years following the deal, Nexteer invested more than $220 million in its Saginaw, Michigan operations, where the firm remains headquartered today.

In addition to pumping capital into cash-strapped U.S. firms, Chinese companies can also fuel job growth and add valuable tax dollars at the state and federal levels. In November 2000, Danish shipping giant Maersk Line ended its service to the Port of Boston, jeopardizing 10,000 local jobs. By April 2001, port director Mike Leone traveled to Beijing to meet with the management team of the China Ocean Shipping (COSCO). His negotiations proved successful in March 2002 when COSCO filled the void left by Maersk and opened direct service from China to Boston, not only saving those 10,000 jobs, but also creating additional ones through a $250 million investment into an expanded container handling facility.

Chinese auto parts firm Wanxiang America has also saved thousands of jobs for the U.S. economy. By January 2013, the firm saved more than 3,000 U.S. positions through multiple acquisitions of foundering U.S. companies. Headquartered in Elgin, Illinois, Wanxiang America has become a $2.5 billion corporation since its founder, Pin Ni, started the U.S. subsidiary out of his home in 1994.

More in TealeafNation.

Joel Backaler is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´ request form.

Earlier this week Joel Backaler published his book China Goes West: Everything You Need to Know About Chinese Companies Going Global. Are you a media representative and do you want to talk to one of our speakers? Drop us a line.

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Book ´China goes west´ by Joel Backaler now available

+Joel Backaler 

The long-awaited book by China consultant Joel Backaler, China Goes West: Everything You Need to Know About Chinese Companies Going Global is now available on Amazon. Joel Backaler has been studying Chinese firms going global for the past decade.

This is what the press release tells about the book:

China Goes West is a primer for business leaders and consumers alike on how to work with Chinese firms, understand cultural differences and prepare for the future. It is full of compelling anecdotes about Chinese companies that have successfully invested in faltering American businesses and saved American jobs, and explores why others have failed. It answers tough questions about national security and regulatory concerns, and offers advice for businesses on both sides of the equation.

Joel Backaler is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´ request form.

Are you a media representative and do you want to talk to one of our speakers? Do drop us a line.

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