By Prof. Dr. Hora Tjitra
http://sinau.me
China and the World:Internationalization Process of Chinese Enterprises
Guest Lecture: Introduction to International ManagementNürnberg, Oct 6th 2010
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
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 BraunschweigOrganizational Psychology and Human Resource Management
Dr. Phil., University of RegensburgIntercultural Psychology and Strategic Management
Executive Education, INSEADHR Management in Asia
Internationalization Chinese Enterprises/2010-09 4
Quick Snapshots of China
Internationalization Chinese Enterprises/2010-09 5
The People of Republic China - 中华人民共和国
Internationalization Chinese Enterprises/2010-09
Some Statistic on China before the 2009 Crisis - Dec 2008
6
Internationalization Chinese Enterprises/2010-09 7
The 2009 Crisis, Better than expected - healthy growth ??
Internationalization Chinese Enterprises/2010-09 8
China and its (new) influence in the World
Internationalization Chinese Enterprises/2010-09
Recent progress and update on Economic, Business and Management in China
(The Economist, Feb 2010)
9
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
The strange success of Government Motors
What to do about space junk
The politics of wind energyAUGUST 21ST–27TH 2010 Economist.com
Contest of the centuryChina v India
Internationalization Chinese Enterprises/2010-09
World’s Top Export Sources (1) and Destination (3)
11
sources: http://seekingalpha.comby 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.
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.comJia, Jun 22 2010
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.orgby alan et. al., Mar 22 2010
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
Internationalization Chinese Enterprises/2010-09 15
Challenges of Chinese Goes Global
Internationalization Chinese Enterprises/2010-09 16
Internationalization Process of Chinese Enterprises
Internationalization Chinese Enterprises/2010-09
The Most Valuable Companies in the World
17
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.”
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
Internationalization Chinese Enterprises/2010-09
Globalization Strategy and its impact on organizational design
Transnational
Multinational
Global Domestic
International
Export
Multinational decentralized Approach
International coordinated Approach
Globalcentralized Approach
Adapted from Bartlett & Ghoshal, 1998
20
Internationalization Chinese Enterprises/2010-09 21
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
Internationalization Chinese Enterprises/2010-09
From the Low-Cost Manufacturer to the High-Tech at a Low Cost
23
Internationalization Chinese Enterprises/2010-09
The essence of “Made -in-China”
24
sourcehttp://blog.chinatells.com/2010/08/4575
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.
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.)
Excellence through Culture, Talent and Change
Tjitra, 2010
Thanks YouAny comments & quest ions
are welcomeContact me at [email protected]
Follow me at twitter@htjitra
27
http://sinau.me
Guest Lecture in International Management Nürnberg, Oct 6th 2010