Opinion | How will Chinese enterprises going abroad navigate new challenges

By Nina Wang

It is the third year for Mr. Cai Jianwen working in Fort Lauderdale, a coastal city located in the U.S. state of Florida, He is the deputy General manager of a high-tech company listed in China Shenzhen Stock Exchange. Before joining Sinocare, he has five years of experience managing environmental companies in Germany and Sweden. His career path mirrors the journey of many Chinese enterprises venturing abroad.

Historically, most Chinese enterprises exported products while maintaining operations in China. Today, with the decoupling of global (especially U.S.) supply chains, Chinese enterprises face the challenge of establishing factories, companies, and teams overseas including product positioning, cultural integration, team building and digital transformation.

Low pricing has often been the go-to strategy for Chinese companies expanding abroad, leveraging their significant cost advantages. This strategy, as evidenced by Temu's slogan "shopping like a billionaire," allows Chinese enterprises to offer a wide range of low-priced products. However, while effective in the short term, this approach may attract criticism from U.S. media and politicians.

For a company aiming to thrive in the U.S. market, relying solely on low prices is insufficient. Additional elements like high quality, environmental consciousness, and strong branding are crucial to avoid harmful price wars. Companies should adopt a long-term perspective when positioning their products and brand.

Cultural integration is an intangible and complex challenge. Although many Chinese university graduates have studied English and enjoy American films, my three years of working in the U.S. have revealed communication challenges among Chinese colleagues. We may be familiar with American culture but not fully understand it due to underlying societal differences.

American colleagues emphasize consensus and collaboration. While we believe "where there is a will, there is a way," American colleagues focus on "process justice." Our colleagues can work abroad for six months without returning home, while American colleagues struggle with two-week business trips to China due to family disruptions. Overtime is a norm for us, while American HR departments focus on ensuring employees take time off and minimize paid time off (PTO) expenses.

To address these challenges, Chinese corporate leaders need to immerse themselves in understanding and embracing these differences, establishing a universal corporate culture that minimizes distinctly Chinese characteristics. By fostering a seamless cultural integration, companies will create a harmonious working environment.

Many Chinese enterprises prefer appointing Chinese nationals as general managers and key positions in their overseas ventures to facilitate communication with headquarters and often hire Chinese-speaking locals. However, this practice may lead local employees to perceive a "glass ceiling" in their career development and hinder their long-term commitment to the company.

Breaking free from traditional notions of favoritism, companies should establish institutionalized management, risk control, and decision-making mechanisms. Excellence should be the criterion for advancement, regardless of ethnicity, ensuring that all talented individuals can contribute to the company's growth.

With the rise of AI, leveraging digital tools to create an efficient and rapid communication network for global management is crucial. Chinese companies can use big data and AI technologies to optimize production and supply chain management. For example, Haier Group's COSMOPlat industrial internet platform has enabled customized production and intelligent supply chain management, significantly enhancing production efficiency and customer satisfaction. Haier's data shows that the COSMOPlat platform has served over 3,000 enterprises globally, achieving a more than 30% increase in production efficiency and over 40% reduction in inventory.

By actively promoting digital transformation, Chinese enterprises can better compete in the global market, improving their competitiveness and market share. This not only supports the company's growth but also enhances the global image of Chinese enterprises.

Despite all those challenges Chinese companies have advantages over their peers in high efficiency, robust supply chain, lower cost and large talent pool.

The diligence and high efficiency of Chinese workers bring significant, often unseen advantages—speed and efficiency. This efficiency is evident not only in production and manufacturing but also in corporate management and market responsiveness.

Chinese enterprises boast a comprehensive and robust supply chain system, enabling them to respond quickly in the global market. This supply chain advantage allows Chinese companies to swiftly adapt to market changes and maintain a competitive edge.

Despite facing an aging population, China still produces approximately 12 million university graduates annually. This gives China a relatively large talent pool on the global stage. This abundant talent resource provides a solid foundation for Chinese enterprises to compete in international markets.

In terms of production costs, China holds a significant advantage over the United States. Whether it's products, components, labor processing, or living expenses, costs in the U.S. are typically 2 to 7 times higher than in China. It's often joked that the numbers are the same, only the currency differs between the two countries.

Based on these advantages, Chinese enterprises often compete in international markets through a "dimensionality reduction attack" approach. This not only highlights the competitiveness of Chinese companies but also showcases their unique strengths in the global market.

'After three years of integration, our China and US teams share the same company culture, mission, and vision as we collaboratively build the future we look forward to.' Cai said. However, more challenges call for his efforts to overcome such as reducing operational costs and exploring new market segments in the United States.

The views do not necessarily reflect those of DotDotNews.

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