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A popular topic of discussion – especially for those of us involved in the business of globalization – the global expansion of Chinese companies makes for some interesting conversation or, in this case, debate. Last week the British Chamber of Commerce in China and China-Britain Business Council co-hosted a debate which sought to address the ability of Chinese companies to ‘go global.’ Bringing in panelists from companies such as Lenovo and Weber Shandwick, the debate sparked an enlightening discussion that delved into matters of branding and historical challenges among others. See below for a quick breakdown of the debate and the arguments made.

Prior to the start of the debate, Ralph Rogers, Director of the British Centre and, consequently, the debate moderator, introduced each of the panelists and provided some quick statistics regarding China business:

Panelists

  • Mark Pinner, Senior Product Communications Manager, Lenovo
  • Alistair Nicholas, Executive Vice President, Asia Pacific, Weber Shandwick
  • Doreen Wang, Group Account Director & Head of Branding, Millward Brown, China
  • David Wolf, President & Chief Executive Office, Wolf Group Asia

China Business Statistics

  • Chinese foreign investment in 2011 was $4.4 billion
  • 61 Chinese companies listed in Fortune’s Global 500 in 2011
  • Not one Chinese brand included in Businessweek’s top 100 global brands in 2011
  • According to a Millward Brown conducted poll, less than 12% of US and European consumers can spontaneously name a single Chinese brand

The panelists were divided into two groups, the first arguing that Chinese companies could in fact go global and the second rebutting that claim. Both sides were given 3 rounds to make their case, which resulted in the following major points:

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Barriers/Hurdles to ‘going global’
1. Going global is difficult at the best of times

Several decades ago when the United States was branching out into international markets, the world was flat, but that is no longer the case. Competition has increased greatly and the stakes are now higher.

2. Lack of absolute advantage

China could once claim low cost as an economic advantage, but those days are past. With issues over currency, increasing labor costs and questionable product quality, price is no longer China’s absolute advantage.

3. Global resistance to Chinese brands

a) Regulatory Compliance Issues: Chinese companies face opposition due to an association with unreliable quality and products that violate international regulatory compliance standards.

b) Opposition to “Brand China”: Until the “China Brand” undergoes a ‘facelift,’ Chinese companies will continue to struggle gaining acceptance from skeptical foreign markets.

chinese companies

Arguments for why Chinese companies can go global
1. It’s a matter of time

China has only had about 35 years since its opening and reform.  Chinese companies simply haven’t had enough time expand globally yet.

2. Competition

Chinese companies perform well against competition. Remove governmental protection and the performance of Chinese enterprises will improve.

3. Examples of Chinese companies that have already achieved global recognition/success:

4. “Globalization model” in progress

With no applicable role models on which to base its global expansion, China is in the process of building its “globalization model.”

5. Brand not indicative of global success

Chinese companies need not achieve global brand recognition in order to globalize. Just because a Chinese company is not “over-branding” does not mean it cannot achieve a global quality.

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While not a comprehensive overview of the present circumstances regarding the globalization of Chinese companies, the discussion did touch on some key points. The panelists argued well, drawing from their knowledge and experience living and working in China. After an informative debate, the consensus was that despite major challenges, Chinese companies are indeed expanding beyond national borders and have the power to globalize within their grasp.

CSOFT helps China and Asia-based companies develop world-ready and world-class images, governance, talent, and culture. Interested in learning more about how CSOFT supports Chinese business success? Feel free to contact Ben Pinney via email at .

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