I’m not the only one thinking that a major trend for the next decade or more will be “Chinese companies going global”. Especially in technology. If so, they will need to heed the advice in this week’s SCMP: For Chinese firms going out, global success requires truly ‘going in’. The article makes a number of important points but the one that got my attention was “Based on our research, I suggest two priorities. First, build alliances and be a responsible “local citizen”. A global business must integrate into the local ecosystem and become a positive force in the host society. This means offering cost-effective solutions and contributing to local development”.
From my experience, Chinese companies find it difficult to understand and appreciate the cross-cultural complexities of “becoming a positive force in the host society” and this will be a critical success factor for well funded companies with global ambitions. Success won’t come from just being the largest, richest, cheapest, fastest or best connected, as can happen in China. It will be necessary to pay for local advice, listen carefully, hire local people and make a positive contribution to the local community (i.e. be a responsible “local citizen”). Not all of them will succeed at this.
As we move to the ‘2nd wave’ of Chinese outbound investment (the 1st wave, known as ‘going out’ ended abruptly in 2019) and follow the example of the Japanese after their crash in 1991, it is likely that the companies that operate ‘under the radar’, avoid the attention of media and build/empower local teams and advisers (rather than control everything from Head Office) will be those who become truly global players.
