Author: CHUNG Yoon Ngan
Date: 07-13-12 18:04
Time to assume leadership
By M Qin Lin, JAIME KOH
July 13, 2012 - 9:36am http://www.chinadailyapac.com
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Tying up with local partners and having more established firms as mentors are some of the ways Chinese companies seeking global expansion should explore. (Photos by Kenrick Lee / China Daily Asia Weekly)
Even for a global manufacturing leader like the Changsha-based Broad Group, which has found international recognition, unfamiliarity with local environments can be a stumbling block to further growth.
Tying up with local partners and having more established firms as mentors are some of the ways Chinese companies seeking global expansion should explore. Banding together and collaborating with suitable partners is the way to go, speakers at the FutureChina Global Forum 2012 told corporate executives.
The forum, held on July 9-10 in Singapore, was organized by Business China, a non-profit organization launched in 2007 to facilitate a deeper understanding of China. This is the third year Business China has hosted the forum. This year’s event featured more than 60 speakers over 19 plenary sessions and panel discussions.
Three top Chinese executives shared their experiences in a panel discussion on China’s new breed of entrepreneurs. The session was held in collaboration with China Daily Asia Leadership Roundtable and moderated by Alexander Wan, senior advisor, China Daily Asia Pacific.
Broad Group Senior Vice President Juliet Jiang said her firm was looking for a “cookie cutter” template that can help the established non-electric central air conditioning manufacturer quickly and efficiently set up multiple franchisees around the world for its newer energy-saving, sustainable buildings business.
Jiang, whose company has been operating internationally for nearly 15 years with its air conditioning systems used in the Madrid airport and other large building complexes, said they still have their difficulties vis-ŕ-vis local languages and cultures.
“We are still a baby (internationally),” she said.
For Feng Jun, Chairman and President of Aigo Information Digital Technology, it is important that Chinese entrepreneurs stop looking inward and cooperate and help one another more. He used the analogy of the popular mahjong game: Players have to stay on their toes and continually guess their opponents’ strategy, punishing the player who throws out the winning tile by making him pay double. Feng urged Chinese businessmen to start opening up and help one another.
“We’re not selfish people but the rules are selfish. People have to be cautious when playing mahjong because they may suffer for helping others,” he said.
This tendency to “hide good things, like baozi or jiaozi (dumplings), unlike pizza or burger where everything is visible, may be why Chinese can’t build a good brand”, he told the audience.
His recently established Aigo Entrepreneurs Alliance (AEA) helps businesses gain a foothold internationally. AEA’s goal is to provide a platform to businessmen pursuing overseas expansion to learn from the success of large corporations.
In Europe, AEA is opening a contact office in Copenhagen to help its member firms connect with Danish firms in design and innovation to penetrate Western markets. It is also looking at Belgium, with its strategic position on the continent, as a preferred investment destination.
With the growing fascination and respect that the world has for all things Chinese, this is a good time for Chinese firms to push forward, said Huang Jianping, a former diplomat and international banker who founded investment firm Jpigroup Inc.
He recalled how as the Chinese representative to the United Nations office in Vienna in 1985, “we were nothing”.
“Politically also, no one asked us anything about anything,” he said. “We had to tell them: Hey, look, this is what we think.
“Now, we Chinese go out anywhere — New York, Geneva, Kuala Lumpur — and people invite us, ask us what we think about this or that. People respect us, not because of money but for our opinion.”
Feng agreed: “I feel we are very lucky to be born in this generation. Twenty years ago, my mother gave me 220 yuan ($35). That amount can’t do much today, but it was enough then to start a new business. I was able to sell 600 keyboards at a 5 yuan profit each.”
Not all Chinese entrepreneurs are raring to go overseas, though. Some Chinese firms may be fearful or apathetic about the prospect. Feng said he could identify with that feeling, having made the leap from a career in civil engineering to an uncertain future in IT. “Internationalization is a very remote or distant goal for them. There are opportunities but many people find excuses not to take them.”
Chinese State-owned enterprises may be more limited in their ability to expand abroad because of their role and responsibilities in the broader economy. But privately owned firms have the potential to grow and the ability to adapt internationally, said Feng.
“Looking at how many Japanese and (South) Korean private companies have successfully built up an international business, I feel private Chinese firms can go out into the world too,” he said. Just as Hong Kong is a springboard for foreign firms to enter the Chinese market, Singapore, with the advantage of an English-speaking environment, can be a gateway for Chinese firms venturing abroad, he added.
By expanding internationally, firms can continue to build on the wealth created in China in the last 30 years, allowing the economic impact enjoyed by the Chinese today to continue, said Jpigroup’s Huang. He hoped that Chinese firms can become a global model for businesses around the world.
“I hope to see some Chinese trendsetters soon,” he said.
The impetus for internationalization may come sooner than later, said Feng. He predicted that the 2012 Olympics in London may spur Chinese firms to take a more aggressive approach to expanding overseas. He noted a rush of internationalization of firms four years after countries host the Games, attributing the move to companies’ disappointment at seeing global attention shift to the new host city.
Pointing to Samsung’s entry into the Chinese market in 1992, four years after the 1988 Seoul Olympics, he said South Korean companies like Samsung and Hyundai banded together to enter the international market to keep the business momentum created by the Games going.
So when 1.4 billion Chinese watch how the International Olympic Committee — responsible for selecting the host city, overseeing the planning of the Games, and negotiating sponsorship and broadcasting rights — is cooperating with British companies at the London Olympics, that feeling of heartbreak may lead to Chinese firms pushing outward, he said.
Huang noted that China’s success in growing faster than the rest of the Anglo-Saxon countries lies in its institutional edge. “Valuation is always time-based,” said Huang. He explained that when the concentration of ownership is high, companies are able to defy time, which becomes infinite. “That means you can plan (for) your company longer term and you don’t have to worry about quarterly reports.”
Drawing a historical parallel, Huang pointed out that the greatest strength of the British empire was its institutional edge. “The respect for talent, for order and they actually had the system to create order in their colonies.”
Huang, who also advises multinationals and international government agencies on their China market entrance and growth strategies, said the world lacks leadership now. China should be assuming that role because of its financial and institutional strength.
“This is the only opportunity we have,” Huang said, adding that the current global economic conditions meant there was little resistance from Europe and the US to China assuming a leadership position. “There is now a great opportunity for China to be able to do that.”
Referring to former Chinese leader Deng Xiaoping’s admonition that China should keep out of the limelight — tao guang yang hui — Huang said the situation today makes that impossible. China could keep its head down in 1978 when its economic status was low. “But now you’re number two and most likely in three years, you’re number one (in GDP). You have worked out of your way of being able to tao guang yang hui.”
“It’s not a choice, you just have to do it now,” Huang said of China’s opportunity and position as one of the world’s fastest-growing nations. “There is no resistance to China being a global leader, there is a strong invitation for China to be a leader.”
However, the issue is how to be an efficient leader, he added: “How to take care of China’s interest while taking care of the others as well.”
China’s new breed of entrepreneurs
Date: July 10, 2012
Venue: Shangri-la Hotel, Singapore
Chairman and President, Aigo Information Digital Technology
Chairman Emeritus and Chief Strategic Adviser, Jpigroup Inc
Senior Vice President,
China Daily Asia Pacific