Global Chinese Companies: Challenges or Opportunities for Western Multinationals?
I recently returned from a two-week trip to Europe where I represented Frontier Strategy Group at several high-profile events focused on Chinese overseas investment, including the Hamburg Summit, and shared key findings from my new book, China Goes West: Everything You Need to Know About Chinese Companies Going Global. We’re finding that our clients, executives from large American and European multinational companies, are facing intense competition from Chinese companies. At an event we organized in Shanghai this past April, 41% of the executives in attendance ranked “Chinese competition” as the factor most likely to prevent them from achieving their 2014 targets. I can honestly say that even just a few years ago, when I worked in Asia, that this was not a top concern.
Increasingly though, multinational executives are witnessing Chinese firms not only grow in strength within China, but also expand into emerging and mature markets alike. This phenomenon is leading to new challenges – How can I compete more effectively against Chinese firms in third-party markets? – as well as potential opportunities – Can my firm partner with Chinese companies seeking to expand overseas to achieve a ‘win-win’ outcome?Regardless of whether our clients view the internationalization of Chinese firms as a potential threat or opportunity, the time is now for global executives to better understand the motivations for why Chinese companies are going global and how this trend will impact their business in the years to come.
My research focused exclusively on this topic, and I introduced several key findings at the events at which I spoke in Europe over the last two weeks. Over the next several weeks I will write a series of blog posts addressing the following three questions from my book that I spoke about during my travels:
- Can Chinese firms build competitive global brands?
- Why do Chinese companies want to expand internationally if the domestic market is so large?
- Should Western multinationals view the internationalization of Chinese companies as a threat or an opportunity?
Come back next week for the first post in this three-part series – or leave a comment and share your view on the three questions above.