The Globalization of Chinese Companies

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The Globalization of Chinese Companies

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The rise of China has been widely accepted as a key development in the 21^st Century. As an indicator of this trend, many leading Chinese firms have started to show their muscle through the ambitious acquisition of global brands like Thinkpad and RCA. Nevertheless, most people in western countries know very little about these Barbarians at the Gate. Who are they? Will they change the global competitive landscape as Japanese firms did in the 1980s? How should western companies react to these new challengers?

The rise of these ambitious Chinese companies in the global stage could offer both opportunities and challenges. In this book, you will see many convincing and in-depth case studies, first-hand interview as well as useful frameworks to understand this next wave of globalisation.

The four authors of this book constitute a strong, diversified team. There is a combination of experts on marketing, strategic human resource management, leadership development and case studies. They have many years of teaching experience in leading schools in the world including IMD, CEIBS, University of Michigan, HKUST, University of Southern California, Chinese University of Hong Kong, and Kellogg School of Management. The extensive consulting experience of the authors also provide an insider’s view.

There are many insights from the authors and interviewees in this book, including:

A company could choose to go global through M&A, organic growth or strategic alliance.
In terms of organizational capability, Chinese firms are globalizing from weakness rather than strength.
A global company should have not only global employee competence but also global employee mindset and global employee governance.
There are many quiet heroes in globalization like Huawei, Galanz and CIMC. They didn't make as much noise as TCL and Lenovo, but they are even more successful.
Chinese firms are very flexible and opportunity driven, which could be both a strength and a weakness for them.
Very often, the M&A decision of Chinese firms are driven by complex motivation, which could be political or economic, rational or irrational, personal or impersonal.
Chinese firms are leader-driver while western firms are system driven. As a result of this difference, the integration between Chinese and western companies will be very challenging.
When going abroad, Chinese firms are facing not only political resistance but also distrust from local staff and labor unions.

Preface

1. Reaching out

1.1 Burning Passion

1.2 Surging Forward

1.3 The Collective Will

1.4 Things to Remember

1.5 Questions to Ask

1.6 What is a Truly Global Firm?

¨ Navigation through the Book

2 Realities and Destination

2.1 National Competitive Advantages

2.2 The Value of Globalization

2.3 Restructuring Value Chain to Adapt Globalization

2.4 Reverse Thinking of the Value of Globalization

2.5 Stages of Globalization

2.6 Ambition of Globalization

2.7 From “Resource Advantage” to “Capability Advantage”

2.8 Japanese Model of Globalization

2.9 Japan Can, Why Can’t We?

2.10Strategic Pitfalls of Japanese Model

2.11 The Paradox of “Chinese Price” and “Chinese Brand”

2.12 Know What You Want

2.13 Obstacles to Overcome

¨ Summary

3. Think before You Jump: The Strategic Choices in Globalization of Chinese Firms

3.1 What has Globalization Changed?

3.2 Essence of Strategy

3.3 Globalization Strategy

3.4 Thinking through the Key Questions of Globalization

3.5 Globalization Strategy Requires Candid Self Understanding

3.6 Hidden Champions in Globalization

¨ Summary

4. All Roads Lead to Rome: Globalization Path of Chinese Firms

4.1 Choosing a Globalization Path

4.2 Internal Growth

4.3 Merger & Acquisition

4.4 Strategic Alliance

4.5 Strategic Focus of Globalization Influences the Path to Pursue

4.6 Global Capability Determines the Path to Pursue

4.7 A Clear Self-Understanding

4.8 The Know-how of Overseas Acquisition

4.9 Learn from the Acquisition Masters

¨ Summary

5. People First: Building Global Employees Competence

5.1 Overview of Organization Capability Framework

5.2 Shortage of Global Talent

5.3 Starting from the Top

5.4 The Fittest Is the Best

5.5 Prepare for the Future

¨ Summary

6. Unity amidst Diversities: Shaping Global Employee Mindset

6.1 Culture Difference: A Blessing or a Curse

6.2 Cultural Challenges of Chinese Firms Going Global

6.3 Bridging Culture Gaps

6.4 Shaping and Building Global Culture

¨ Summary

7. Providing Right Support: Structuring Global Employee Governance

7.1 Challenges of Global Employee Governance

7.2 Common Global Organizational Structure

7.3 Comparison of Different Global Structures

7.4 Evolution of Global Structures

7.5 Process of Designing Global Structure

7.6 Balance of Centralization and Decentralization of Power

¨ Summary

8. China Rooted Global Outreach

Appendix

Appendix 2-1 CIMC Realized Globalization with National Competitive Edges

Appendix 3-1 The Utilization of Overseas Resources by China International Marine Containers Group (CIMC)

Appendix 3-2 The Cleverness versus the Big Wisdom in Globalization.

Appendix 4-1 China Mobile’s Utilization of Global Capital Resources

Appendix 4-2 Galanz’s Way of Strategic Alliance

Appendix 4-3 The CEMEX Way

Appendix 5-1 Trend Micro’s Hybrid Team

Appendix 5-2 Talent Development in Lenovo Group

Appendix 6-1 China National Aviation—Comprehensive Strategy

Appendix 6-2 Huawei’s Strategy of Global Development

Appendix 7-1 ZPMC’s Global Strategy

Appendix 8-1 Self-Assessment

Appendix 8-2 Action Plan

Appendix 8-3 Chinese Global Fortune 500 Companies 2008/9

Bibliography:

Arthur Yeung is Phillips Chair Professor of HRM at CEIBS and ex-CHO of Acer Group, specializing in organizational capability and globalization of Chinese firms. Author of several award-winning articles and nine books, Dr. Yeung was featured as an “Executive Development Guru” by Business Horizon. He sits on editorial boards of five international academic journals and serves as independent board member for five corporations and one non-profit organization.

Katherine Xin is Professor of Management at CEIBS and the editor-in-chief of Harvard Business Review (China). For the last two decades, Dr. Xin worked and lived in the US, Europe and Asia conducting research, teaching and consulting for multinational companies and global Chinese enterprises. She has published extensively and was previously on the faculties of IMD in Switzerland, the University of Southern California, and the Hong Kong University of Science and Technology. Her current research and consulting focus is on leadership, performance management and talent strategy.

Dr. Waldemar A. Pfoertsch is Research Fellow at CEIBS Shanghai, China, and Professor for international Business at the Pforzheim University, Germany. He was Associate Professor of Marketing at CEIBS from 2007 to 2010. Dr. Pfoertsch is the author of various books and numerous articles. The most current books are IngredientBranding: Making the Invisible Visible, and B2B Brand Management, which he co-authored with Philip Kotler. He has also published textbooks about Business-to-Business marketing, social marketing, internet and internationalization strategies.

Dr. Shengjun Liu id Deputy Director of CEIBS Case Center and CEIBS Lujiazui International Finance Research Center. His books include China CEO: A Case Guide to Business Leaders in China, Flowers and Thorns: Globalization of Chinese Companies; Power of Management: Institutional Solutions to China’s Economic Challenges, etc. Dr. Liu is also a columnist for many Chinese leading media.