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

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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)

  1. 1. By Prof.Dr.HoraTjitra http://sinau.me China and the World: Internationalization Process of Chinese Enterprises Guest Lecture:Introduction to International Management Nürnberg,Oct 6th 2010
  2. 2. Internationalization Chinese Enterprises/2010-09 Agenda 2 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
  3. 3. 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 Braunschweig Organizational Psychology and Human Resource Management Dr.Phil.,University of Regensburg Intercultural Psychology and Strategic Management Executive Education,INSEAD HR Management in Asia
  4. 4. Internationalization Chinese Enterprises/2010-09 4 Quick Snapshots of China
  5. 5. Internationalization Chinese Enterprises/2010-09 5 The People of Republic China - 中华人民共和国
  6. 6. Internationalization Chinese Enterprises/2010-09 Some Statistic on China before the 2009 Crisis - Dec 2008 6
  7. 7. Internationalization Chinese Enterprises/2010-09 7 The 2009 Crisis,Better than expected - healthy growth ??
  8. 8. Internationalization Chinese Enterprises/2010-09 8 China and its (new) influence in the World
  9. 9. Internationalization Chinese Enterprises/2010-09 Recent progress and update on Economic,Business and Management in China (The Economist,Feb 2010) 9
  10. 10. Internationalization Chinese Enterprises/2010-09 10 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 Thestrangesuccess ofGovernmentMotors What to do about space junk The politics of wind energyAUGUST 21ST–27TH 2010 Economist.com Contest ofthe century China v India
  11. 11. Internationalization Chinese Enterprises/2010-09 World’s Top Export Sources (1) and Destination (3) 11 sources: http://seekingalpha.com by 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.
  12. 12. Internationalization Chinese Enterprises/2010-09 Continuously Top Destination for FDI since 2002 12 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.com Jia,Jun 22 2010
  13. 13. Internationalization Chinese Enterprises/2010-09 Chinese Investment is mainly in Natural Resources and Finance 13 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 2010
  14. 14. Internationalization Chinese Enterprises/2010-09 Australia has been the single most preferred destination for Chinese non-bond investment 14 China has led the way,among the BRIC in Africa,striking a series of billion dollar minerals-for- infrastructure deals
  15. 15. Internationalization Chinese Enterprises/2010-09 15 Challenges of Chinese Goes Global
  16. 16. Internationalization Chinese Enterprises/2010-09 16 Internationalization Process of Chinese Enterprises
  17. 17. Internationalization Chinese Enterprises/2010-09 The Most Valuable Companies in the World 17
  18. 18. Internationalization Chinese Enterprises/2010-09 Five possible scenarios of China’s Future 18 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.”
  19. 19. Internationalization Chinese Enterprises/2010-09 Chinese Enterprises Dominates the Fortune 500,... 19 • International Sales / Market / customers • Production / Factories abroad • Foreign Talents • Global Top Managers • ... ...,but
  20. 20. Internationalization Chinese Enterprises/2010-09 Globalization Strategy and its impact on organizational design Transnational Multinational GlobalDomestic International Export Multinational decentralized Approach International coordinated Approach Global centralized Approach Adapted from Bartlett & Ghoshal,1998 20
  21. 21. Internationalization Chinese Enterprises/2010-09 21
  22. 22. Internationalization Chinese Enterprises/2010-09 ...Chinese brands are unlikely to be dominant anytime soon 22 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
  23. 23. Internationalization Chinese Enterprises/2010-09 From the Low-Cost Manufacturer to the High-Tech at a Low Cost 23
  24. 24. Internationalization Chinese Enterprises/2010-09 The essence of“Made -in-China” 24 sourcehttp://blog.chinatells.com/2010/08/4575
  25. 25. Internationalization Chinese Enterprises/2010-09 Globalization challenges for the HR partners and champions 25 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 Other Our company has faced no barriers 44 25 24 22 21 19 19 3 5 10 11 14 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.
  26. 26. Internationalization Chinese Enterprises/2010-09 Challenges and Opportunities of Chinese Enterprises 26 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.)
  27. 27. Excellence through Culture, Talent and Change Tjitra,2010 Thanks You Any comments & questions are welcome Contact me at htjitra@zju.edu.cn Follow me at twitter@htjitra 27 http://sinau.me Guest Lecture in International Management Nürnberg,Oct 6th 2010

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