Private Enterprises Are Global Investors

Meet Local Needs

So how do such private enterprises survive and develop in local markets?

It’s not easy. Boston Consulting Group Statistics show that Chinese acquirers complete only 67 percent of their outbound deals – a result which does not compare favorably with those of developed-world acquirers. Many Chinese entrepreneurs say that disparities in market principles and culture are the main stumbling blocks.

“We can’t simply apply domestic principles to foreign markets,” Chairman of New Hope Group Liu Yonghao said. “Nor can we stick to conventions when conducting M&As and developing business overseas,” he added.

The successful experience of leading Chinese web services company Baidu has been to release mobile products that accord with local customers’ needs. For example, it launched a social live-streaming site in Indonesia, a group buying business in Brazil, and its map services cover more than 100 countries. A Baidu worker revealed on September 1 during the 2016 Baidu Technology Innovation Conference that Baidu mobile products are available in more than 200 countries and regions. The company now has 1.6 billion registered users and 300 million active users – double those in 2015.

Today, many knowledge intensive firms prefer to establish overseas research and development (R&D) centers to sharpen their innovation capabilities and international competitiveness.

The Huawei logo above Warsaw Central Railway Station.

Huawei announced on June 14, 2016 during the Fourth European Huawei Innovation Day, the opening of a Mathematics Research Center in France. It employs more than 80 researchers, all of whom have doctorate degrees. The move highlighted Huawei’s advancement of its role in basic scientific research, particularly mathematical algorithms, since setting up its first mathematics research center in Russia.

To date, Huawei has established 16 research centers worldwide, including the France Research Center, where four teams respectively focus on design, digital imaging, mathematics, and home devices.

On November 4, 2015, ZTE Corporation opened an R&D center in Tokyo. Its focus is on developing key 4G and 5G network technologies and accelerating commercialization of the Pre-5G and 5G technologies, as well as deepening collaboration with operators and academic institutions in Japan.

There are many other examples. Wuhan Guanggu Lanyan New Energy Co., Ltd. established an R&D center in Denmark which has innovated biomass heating technology. The Tri-Ring Group Corporation established an R&D center in Germany which helped generate higher revenues from overseas markets for the company amounting to RMB 215 million. Companies such as Shandong Linyi Transnational Procurement Center and Shandong Huasheng International Trade Co., Ltd. have also set up overseas warehouses, R&D centers, and sales branches, so forming a relatively complete international sales network.

Guo Guangchang, chairman of Fosun Group, said that because in the past most Chinese enterprises were “pushed” to go global, they often acted passively. Now, however, they take more initiative, and are proactive in their optimum utilization of international resources and expansion of common economic development.

Liu Shaohua is a reporter with People’s Daily (Overseas Edition).

Lei Gongming is currently a postgraduate at the School of Journalism and Communication of Wuhan University.