Joel Backaler, author of China Goes West, talks of the globalization of Chinese companies and whether or not the West needs to be wary of them.
Chinese companies are globalizing at an unprecedented rate. While Lenovo is now the world’s largest PC maker, Haier is the world’s largest consumer appliance manufacturer. Huawei has been giving Ericsson a run for its money in the telecom equipment space, and now two-thirds of its revenue comes from overseas. Other companies like real estate major Dalian Wanda, conglomerates like Fosun, and consumer goods manufacturers like Shuanghui and Bright Food have been on a global M&A spree.
What is fuelling their global ambitions? Are their strategies sophisticated enough? Also, Chinese companies often run different kinds of challenges when they go global—especially protectionist concerns in the West. How much of that is valid?
Q. Compared to western multinationals, Chinese companies are fairly young. Let’s take Lenovo which as a recent Businessweek article put it: “sold only one product, PCs, in one country, China,” 10 years ago. “Now it sells PCs, phones, tablets and servers in more than 160 countries. It has 46,000 employees.” That is a phenomenal achievement in a short timeframe. Do you think that some Chinese companies have found ways to shorten the “learning curve” and achieve global scale faster than it would normally take?
[This article has been reproduced with permission from CKGSB Knowledge, the online research journal of the Cheung Kong Graduate School of Business (CKGSB), China's leading independent business school. For more articles on China business strategy, please visit CKGSB Knowledge.]