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



Opening Keynote Speech at the 4th China Week for the Ohm Hochschule MBA Students in Hangzhou. ...

Opening Keynote Speech at the 4th China Week for the Ohm Hochschule MBA Students in Hangzhou.

Internationalization Process of Chinese Enterprises - short introduction about China, (new) influences of China to the world, Chances and Challenges of Chinese Enterprises going Abroad.



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

  • China and the World:Internationalization Processof Chinese Enterprises Fourth China Week in Hangzhou and Huzhou Sep 19 - 23, 2010 By Prof. Dr. Hora Tjitra http://sinau.me
  • 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 27Internationalization Chinese Enterprises/2011-09 2
  • Prof.  Dr.  Hora  Tjitra  -­‐  Cross-­‐cultural  and  Business  Psychology 14 years in Germany 7 years in China Dipl.-Psych., Technical University of Braunschweig Organizational Psychology and Human Resource Management Born and grew up as Chinese Dr. Phil., University of Regensburg Indonesian Intercultural Psychology and Strategic Management Executive Education, INSEAD HR Management in AsiaInternationalization Chinese Enterprises/2011-09 3
  • Quick Snapshots of ChinaInternationalization Chinese Enterprises/2011-09 4
  • The  People  of  Republic  China  -­‐  中华人民共和国Internationalization Chinese Enterprises/2011-09 5
  • Chinese  National  Holidays New Year’s Day Chinese New Year / Spring Festival The Qingming Festival Labor Day / May Day The Dragon Boat Festival Mid-Autumn Day National DayInternationalization Chinese Enterprises/2011-09 6
  • Some Statistic on China before the 2009 Crisis - Dec 2008Internationalization Chinese Enterprises/2011-09 7
  • Chinese  Enterprises  Dominates  the  Fortune  500,  ... ..., but • International Sales / Market / customers • Production / Factories abroad • Foreign Talents • Global Top Managers • ...Internationalization Chinese Enterprises/2011-09 8
  • China  Poised  to  Lead  World  in  Patent  Filings • Patents are considered a measure of technology prowess and innovation. Nations that file the largest number of patents are generally home to innovative corporations and Nobel prize winners. • A new study released in early Oct 2010 by Thomson Reuters says that by 2011 China will most likely pass the United States and Japan in new patent applications. • In 2009, China filed about 279,298 patent applications, ranking third behind Japan, which led the world with 357,338, and the United States, which had 321,741 filings, according to Thomson Reuters. • Experts acknowledge that it is difficult to measure the value of China’s patents (many may be for low-end, incremental technologies), but they say the quality appears source: http://economix.blogs.nytimes.com/2010/10/06/china-poised-to-lead-world-in-patent-filings/? to be improving and that China is on a path to becoming a more innovative country.Internationalization Chinese Enterprises/2011-09 9
  • China and its (new) influence in the WorldInternationalization Chinese Enterprises/2011-09 10
  • The  new  (bubble)  world’s  superpower  ? The Republican to beat Obama? Helping Pakistan The strange success of Government Motors What to do about space junk The politics of wind energy The world largest car’s market AUGUST 21ST–27TH 2010 Economist.com Contest of the century China v India 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 IndexInternationalization Chinese Enterprises/2011-09 11
  • World’s  Top  Export  Sources  (1)  and  Destination  (3) Combining the import and export top twenty, we can indeed confirm that China is as important as the US or Germany are. sources: http://seekingalpha.com by Erick van Dijk, Aug 15 2010Internationalization Chinese Enterprises/2011-09 12
  • Buying’s  Power  of  Chinese  Consumers source: harvard business review June 2010Internationalization Chinese Enterprises/2011-09 13
  • Continuously  Top  Destination  for  FDI  since  2002 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.com Jia, Jun 22 2010 2010 A.T. Kearney FDI Confidence IndexInternationalization Chinese Enterprises/2011-09 14
  • 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.org by alan et. al., Mar 22 2010Internationalization Chinese Enterprises/2011-09 15
  • China  Plus  ASEAN  FTA  (CAFTA) ASEAN Founding Members Indonesia Malaysia Cambodia Philippines Laos Singapore Myanmar Thailand Vietnam (Brunei)Internationalization Chinese Enterprises/2011-09 16
  • New  Way  of  East-­‐West  Collaboration Limitation of • Language n a Chi • Knowledge ears in • Physical · 1 0y Ch ina rs in Chinese: 0 yea · 1 adapt to the other counter part more Ch ina rs in 0 yea Chinese: 1 n a· start to take the leading role more in Chi ears ·1 0y na in Chi • Economy ars 10 y e • Knowledge Development of • LanguageInternationalization Chinese Enterprises/2011-09 17
  • Internationalization Process of Chinese EnterprisesInternationalization Chinese Enterprises/2011-09 18
  • Five  possible  scenarios  of  China’s  Future 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.” By Professor William A. Fischer and Rebecca Chung, (October, 2006) http://imd.chInternationalization Chinese Enterprises/2011-09 19
  • Internationalization Chinese Enterprises/2011-09 20
  • ...  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 SorellInternationalization Chinese Enterprises/2011-09 21
  • From  the  Low-­‐Cost  Manufacturer  to  the  High-­‐Tech  at  a  Low  CostInternationalization Chinese Enterprises/2011-09 22
  • The  essence  of  “Made  -­‐in-­‐China” source: http://blog.chinatells.com/2010/08/4575Internationalization Chinese Enterprises/2011-09 23
  • What  the  West  doesn’t  get  about  China source: harvard business review June 2010Internationalization Chinese Enterprises/2011-09 24
  • infrastructure, the competitiveness and quality of institutions, and conflict Not  Only  that  Intra-­‐Regional-­‐Trade   within  Asian  Countries  increase  ... Figure Asia has experienced an increase in share of intra-regional trade 2 Source: World Bank World Development Indicators, 2011. Note: Figures refer to total trade (exports plus imports). The intra-regional trade share of region i is defined as IT sharei = (Xii+Mii)/(Xi+Mi), where Xii = exports of region i to region i; Mii = imports of region i from region i; Xi=total exports of region i; and Mi = total imports of region i Southeast Asia has grown rapidly in recent decades. that of the EU (about 75 percent). Across different Intricate regional production networks and supply subregions within Asia, East Asia is the most inte- chains have been established in industries such as grated subregion, although labor and monetary/finan-Internationalization Chinese Enterprises/2011-09 25
  • ...  but  also  Intra-­‐FDI-­‐Flow  within  Asian  Countries .. Source and destination of outward and inward FDI flows, selected Asian economies, – $3 billion $0.7 billion! ! $71 billion (developing Asia to Asia-7) $38 billion ! ! $12 billion ! ! $7 billion ! ! ! ! Closer   ! $2 billion $10 billion $69 billion O shore nancial centers ! $2 billion $44 billion Pan-­‐Asia  Regional   $56 billion (Asia-5 to developing Asia) ! $0.2 billion Collaboration ! $1 billion South–South economic links Africa Latin America Developing Asia O shore nancial centers North excluding Japan Other South Japan Direction of ows: ! South to South ! South to North (and vice versa) ! South to o shore nancial centers (and vice versa) Notes: See Figure ... Sources: See Figure ... 71Internationalization Chinese Enterprises/2011-09 26
  • The  Role  of  Culture  in  Organizations Global/ Domestic Export International Multinational Transnational Domestic Ability Must adapt Localized Need to multiculturalism required to approach and Structure manage making an negotiate and its products and reduces need cultural Impact do business services to local for cross- diversity inside with foreign cultures. Global Cultural and outside distributors. cultural awareness. the firm. All diversity levels need strongly affects cross-cultural external management relationships, skill for especially with maximum potential buyers flexibility. and foreign workers. HIGH Strategic Importance of Culture LOWInternationalization Chinese Enterprises/2011-09 27
  • 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? Three big challenges for Chinese Our company does not have enough managerial talent 44 companies’ globalization • Developing Managerial Talent We lack sufficient capital 25 • Managing Cultural Barriers We have an inadequate understanding of legal and/or reputation risks in other countries 24 • Attracting International Talent Cultural barriers make the business difficult to manage 22 Survey from McKinsey Quarterly • Most executives at Chinese companies say the Potential customers have concerns about the quality of Chinese products 21 biggest obstacle to the global growth of their companies is a lack of managerial talent. Customers are unfamiliar with Chinese brands 19 • During the globalization, most Chinese companies face the challenge of combining Chinese and Governments or other stakeholders in other countries had a negative reaction to our proposed activities 19 Western forms of communication and cultural norms. Funds have been difficult to find outside mainland China 14 • 88% of the Chinese executives said that their globalization efforts were hindered by the scarcity Logistical barriers make the business difficult to manage 11 of people with real cross-cultural knowledge or experience managing foreign talent. Potential employees in new geographies are not familiar with our company 10 Other 5 Our company has faced no barriers 3Internationalization Chinese Enterprises/2011-09 28
  • 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.)Internationalization Chinese Enterprises/2011-09 29
  • Fourth China Week in Hangzhou, Ningbo and Shanghai Sep 19 - 23, 2011 Thanks You An y co m m e n ts & q u e s ti o n s are welcome Contact me at htjitra@zju.edu.cn http://sinau.me