From "Going Out" to "Being a Global Citizen"

At the 2012 Tianjin Summer Davos Forum, Boston Consulting Group announced the "Top 50 Chinese Enterprises Challenging the World". These top 50 companies are located in various industries such as resources, industrial products, consumer goods, telecommunications, automobiles, financial institutions, and medical care. They include not only global pioneers such as Huawei, Haier, Lenovo, Sany, Geely, but also Tiens, Mindray, Hao Children and other "new stars" who have developed rapidly in recent years.

From 2001 to 2011, the annual sales growth of the "Top 50 Chinese Enterprises Challenging the World" reached an average of 20%, far exceeding the global average, but Christoph Nettesheim, senior partner of Boston Consulting Group, said: Pointing out that since the beginning of 2011, the stock market returns of China's global challengers have plummeted, and their profitability has faced enormous pressure, with an average profit margin of 11%, compared with 18% for global incumbents, which shows the traditional advantages of Chinese companies in the past, For example, low labor costs, price competition and a large domestic market, as well as strong state support, all face certain challenges. For this reason, Chinese enterprises are not only thinking about "how to go global" 10 years ago, but also face the challenge of how to "go well" and become a truly respectable global enterprise.

Strengthen M&A Capability

Chinese companies have adopted a variety of methods to establish global businesses. In addition to relying on their own organic growth to expand their businesses, many Chinese companies use M&A transactions to achieve their goals in overseas markets. Although, mergers and acquisitions can help Chinese companies acquire the technology, capabilities, and brands they need. However, to this day, few Chinese companies are proficient in the process of M&A and post-merger integration. For many Chinese executives, closing deals and consolidating deals is still an unfamiliar concept.

At the "Global Social Responsibility of Chinese Enterprises" sub-forum held on the 13th, TCL Chairman and CEO Li Dongsheng talked about the lessons learned from the acquisition of the French Thomson color TV business and Alcatel mobile phone business in 2004. Li Dongsheng said that after the merger, the difficulty of business integration far exceeded their expectations, exposing TCL's own lack of global management experience and capabilities.

Now some Chinese companies have learned from this and are adopting a "let go and learn" approach. They are increasingly taking a hands-off approach to the businesses they acquire and trying to learn best practices from them. For example, after Geely acquired VOLVO, Chairman Li Shufu publicly stated: "Geely is Geely, and VOLVO is VOLVO. These two brands cannot be brought together, so they must be separated."

Acquired by China Minmetals Corporation When OZ Minerals, the world's second largest zinc miner, pledged to keep the Australian mining operations independent, retain a strong OZ Minerals management team, allow the Australian sales team to set local prices, and set up the new combined company's headquarters in Australia. Senior management at China Minmetals also leveraged the knowledge and expertise of their new Australian colleagues in operating large mines, and enlisted the help of the Australian team in evaluating the company's copper project in Peru.

At the same time, however, Naidi Xian also pointed out that while the "hands-off-and-learn" approach has enabled Chinese companies to begin to acquire vital overseas capabilities and trade bases, many companies will eventually need to integrate their operations in order to benefit from global to maximize economies of scale and leverage the combined strengths. The “let go and learn” approach only works when the target business is in good shape. Adopting this tactic can be costly if the acquired business is in trouble.

Choose a suitable global market path

On the road of globalization, Huawei adopts a practical market strategy of first Asia and Africa, then Europe and the United States; while Haier chooses the path of directly entering Europe and the United States. There is no absolute standard for which of the two is right or wrong. Xie Zuchi, Chairman of Booz & Company Greater China, believes that which market path to choose is related to the industry in which the company is located. “When Chinese companies go global, most of the overall investment is still in energy and resources. Where the resources are, the investment will go wherever. At this time, North America, Latin America, Australia, Africa and the Middle East are more suitable for investment than Europe, which has less resources."

In addition to investment in energy, manufacturing More and more companies in industries such as , industrial products and consumer goods are going overseas. Xie Zuchi said that at this time, it depends on the motivation of the company to go out. If its motivation is to acquire foreign companies and acquire some management capabilities or technologies, Chinese companies often go to more mature Western countries, especially Western Europe and the United States. If the motive and purpose is to open up new markets, then it depends on where the new market opportunities are. At this time, every market in the world may become the target of Chinese enterprises to expand overseas.

As for "whether you must follow the development logic of the domestic market first and then the overseas market", Xie Zuchi said, "Not necessarily, the key depends on what your industry is." Expanding from China to overseas, or starting from overseas, Then go back to China, or develop together. "In the future, China will continue to integrate with the world, and some of China's opportunities are often global. In turn, global opportunities are also China's opportunities. We are waiting for the next generation of entrepreneurs to have a global vision and be able to build a company from the very beginning. It is a global enterprise.”

Perfect and fulfill the management of global corporate citizenship responsibility

In the international operation of Chinese enterprises, the role of improving corporate global citizenship practice and stakeholder management in shaping the image of Chinese enterprises and brands getting bigger. At the sub-forum of "Global Social Responsibility of Chinese Enterprises", Huang Shuhe, Deputy Director of the State-owned Assets Supervision and Administration Commission, pointed out that global corporate social responsibility is not only reflected in actively engaging in philanthropy, protecting the environment and saving resources, but also in respecting the interests of the host country and region. The rights and interests of parties and consumers, promoting the common development of the local industrial chain, respecting human rights, and safeguarding labor rights and interests.

Jifan Gao, chairman of Trina Solar, a leader in China's photovoltaic industry, said that Trina Solar cooperated with the German government to reduce the electricity price from 0.64 yuan/watt in 2004 to 0.16 yuan/watt, which is the result of the cooperation of global enterprises . In addition, after the earthquake in Haiti, Trina Solar quickly and timely provided the solar power generation system to medical institutions, which also played a certain role in disaster relief.

In terms of protecting labor rights and interests, Li Dongsheng "made a personal statement": "During our acquisition of Thomson and Alcatel, the color TV business and the mobile phone business have undergone major changes. Beginning to switch to smartphones, the transformation of business means that the organizational structure of the company must also be adjusted accordingly."

In the adjustment of organizational structure, it inevitably involves the adjustment of personnel, that is, layoffs. "Actually, when we started to make M&A plans, we considered layoffs, but we didn't plan to lay off too many people. Later, due to business transformation, we had to lay off employees on a relatively large scale, otherwise it would be difficult for the company to survive." Li Dongsheng said.

TCL clearly felt that in France, the company's requirements for employees' responsibility were much higher than in China at that time. Li Dongsheng said: "We have worked hard to learn to adapt to the requirements of Europe, especially France, for corporate social responsibility and employee responsibility. In general, we have handled the contradictions between enterprises, employees and society during the restructuring process. Although there are some Disagreements and problems were resolved properly in the end. Including the disputes over labor contracts between employees two years ago, they were also resolved by means of reconciliation."

In this regard, Tse Tse Chi believes that Chinese companies must move towards putting themselves The goal of building a respected corporate citizen in the world means that we must penetrate into each other's society and be a local enterprise. "When you go to the United States, you are an American company, and when you go to Brazil, you are a Brazilian company. Our Chinese companies need to adjust their concepts." Xie Zuchi said.