Internationalization Process of Chinese Enterprises (updated Sep 19, 2011)

transcript

By Prof. Dr. Hora Tjitra

http://sinau.me

China and the World:Internationalization Process of Chinese Enterprises

Guest Lecture: Introduction to International ManagementNürnberg, Oct 6th 2010

Internationalization Chinese Enterprises/2010-09

Agenda

1 Snapshots of China 3

2 China and its (new) influence in the world 10

3 Internationalization Process of Chinese Enterprises 17

4 Challenges and Opportunities of Chinese Enterprises 27

Internationalization Chinese Enterprises/2010-09 3

14 years in Germany

7 years in China

Born and grew up as Chinese Indonesian

Prof. Dr. Hora Tjitra - Cross-cultural and Business Psychology

Dipl.-Psych., Technical University of BraunschweigOrganizational Psychology and Human Resource Management

Dr. Phil., University of RegensburgIntercultural Psychology and Strategic Management

Executive Education, INSEADHR Management in Asia

Quick Snapshots of China

The People of Republic China - 中华人民共和国

Some Statistic on China before the 2009 Crisis - Dec 2008

The 2009 Crisis, Better than expected - healthy growth ??

China and its (new) influence in the World

Recent progress and update on Economic, Business and Management in China

(The Economist, Feb 2010)

The new (bubble) world’s superpower ?

The world largest car’s market

The world largest export country

The world largest Forex reserve (2.4 Trillion USD, 30% of the world)

The fastest growing country in the world

The second largest economy in the world

Four of the top 10 Global Bank(the first top 3, market value, FAZ 2010)

Rank first in Engineering Citation Index,and rank three in Science Citation Index

The Republican to beat Obama?

Helping Pakistan

The strange success of Government Motors

What to do about space junk

The politics of wind energyAUGUST 21ST–27TH 2010 Economist.com

Contest of the centuryChina v India

World’s Top Export Sources (1) and Destination (3)

sources: http://seekingalpha.comby Erick van Dijk, Aug 15 2010

Combining the import and export top twenty, we can indeed confirm

that China is as important as the US or Germany are.

Continuously Top Destination for FDI since 2002

2010 A.T. Kearney FDI Confidence Index

The coming of the Lewis turning point for China has been noticed since 2004, when the “shortage of labor”

was first faced by manufacturers in the southern coastal area. Rising labor cost has already impacted

some aspects of the economy.

http://blog.worldbank.comJia, Jun 22 2010

Chinese Investment is mainly in Natural Resources and Finance

China invests abroad for many reasons, including to support an expanding

industrial sector with a growing appetite for natural resources, capital

inputs, and access to advanced technology and foreign markets.

sources: http://frbs.orgby alan et. al., Mar 22 2010

Australia has been the single most preferred destination for Chinese non-bond investment

China has led the way, among the BRIC in Africa, striking a series of

billion dollar minerals-for-infrastructure deals

Challenges of Chinese Goes Global

Internationalization Process of Chinese Enterprises

The Most Valuable Companies in the World

Five possible scenarios of China’s Future

By Professor William A. Fischer and Rebecca Chung, (October, 2006)http://imd.ch

Currently “the world’s factory”, we assume that for the most part, China has acquired sufficient

ability to produce goods and services, which will improve over time, legitimately becoming

“world-class manufacturing.”

Chinese Enterprises Dominates the Fortune 500, ...

• International Sales / Market / customers

• Production / Factories abroad

• Foreign Talents

• Global Top Managers

• ...

..., but

Globalization Strategy and its impact on organizational design

Transnational

Multinational

Global Domestic

International

Export

Multinational decentralized Approach

International coordinated Approach

Globalcentralized Approach

Adapted from Bartlett & Ghoshal, 1998

... Chinese brands are unlikely to be dominant anytime soon

Many economists argue that competitive nations’ trade relationships foster strong global brands by

exposing homegrown products to foreign markets. That would position China to become a brand

powerhouse—but the fast-growing economy has no brands on Interbrand’s global top-100 list.

Sources: HBR Jan 2010, Willem Smith & Michael Sorell

From the Low-Cost Manufacturer to the High-Tech at a Low Cost

The essence of “Made -in-China”

sourcehttp://blog.chinatells.com/2010/08/4575

Globalization challenges for the HR partners and champions

Challenges for Chinese companies(% of respondents from companies based in China, n=63)

What barriers, if any, has your company faced to undertaking activities outside mainland China?

Potential customers have concerns about the quality of Chinese products

Our company does not have enough managerial talent

We lack sufficient capital

We have an inadequate understanding of legal and/or reputation risks in other countries

Cultural barriers make the business difficult to manage

Customers are unfamiliar with Chinese brands

Governments or other stakeholders in other countries had a negative reaction to our proposed activities

Funds have been difficult to find outside mainland China

Logistical barriers make the business difficult to manage

Potential employees in new geographies are not familiar with our company

Our company has faced no barriers

Three big challenges for Chinese companies’ globalization

• Developing Managerial Talent

• Managing Cultural Barriers

• Attracting International Talent

Survey from McKinsey Quarterly

• Most executives at Chinese companies say the biggest obstacle to the global growth of their companies is a lack of managerial talent.

• During the globalization, most Chinese companies face the challenge of combining Chinese and Western forms of communication and cultural norms.

• 88% of the Chinese executives said that their globalization efforts were hindered by the scarcity of people with real cross-cultural knowledge or experience managing foreign talent.

Challenges and Opportunities of Chinese Enterprises

Opportunities for Globalization

• Huge home market with strong growth

• Very Competitive and increasingly Innovative

• Lots of Cash (in particular the SOEs)

• Excellent infrastructure (and partly policy)

• Culture and Values (hardworking, learning etc.)

Challenges for Globalization

• Lack of International Experiences

• Building Global Brands / International Marketing

• Moving-up the Value-China / Innovation

• Management and International Talents

• Culture and Values (In-Out groups, hierarchy etc.)

Excellence through Culture, Talent and Change

Tjitra, 2010

Thanks YouAny comments & quest ions

are welcomeContact me at htjitra@zju.edu.cn

Follow me at twitter@htjitra

http://sinau.me

Guest Lecture in International Management Nürnberg, Oct 6th 2010