Chinese firms in Europe: Limits and Lessons
Discussing the challenges, responses and future of Chinese companies in Europe with Casey Hall of Reuters was a great Monday ease-back from vacation to work yesterday.
Alternating between trips across China and the EU this summer proved what I had suspected: both sides work hard to find ways to collaborate, but some current practices will become cautionary tales over time, and only some point the way forward.
While Chinese firms try to escape brutal price wars at home by gaining markets abroad, EU firms and governments try to learn China’s secrets—sometimes to replicate them, at other times to protect their interests.
Take these frequent talking points about China’s “wins”.
SPEED: At what cost?
EU firms eagerly learn “China speed”, from faster adoption of new tech to leaner communication within and between teams. But there are limits to the model: when Europeans suspect that speed comes from squeezing workers and managers beyond reasonable limits, or tricks with intellectual property, financial or other compliance, they put their foot down and highlight the risk instead of the opportunity.
WORK CULTURES: The need to adapt
Admiration of China (soft power, if you wish) is on the rise. A new generation of expats move to China not to “put things in order” but to learn: openness to innovation, a team-over-ego mindset and perseverance against constant headwinds. PRC firms are excited to bring their way of working to Europe, but soon discover the unwelcome part when Europeans question hierarchies, refuse overtime for both legal and lifestyle reasons, and liken a “China won” narrative to discredited forms of European exceptionalism.
LOCAL MODELS ABROAD: Global lessons
It seems to many that Chinese firms repeatedly find shortcuts straight to the top instead of working their way up in global corporate races. It often appears that their secret comes from business models forged to perfection in China’s brutally competitive environment. That is often contrasted with how global competitors stumble in China: Volkswagen vs BYD, Samsung vs Huawei and so on. But while China is an essential market for global the global portfolios of top multinationals, Chinese firms take their first global steps with virtually no experience abroad, placing one large bet to escape pressure at home.
How can Chinese firms harness the opportunities while managing the risks of neck-breaking global expansion, while also speed-learning the lessons of global multinationals?
In my opinion, successful examples include at least these three key elements.
- ONE: Diverse teams from day-1. Chinese expats won’t figure out multiple local cultures under time pressure, just a ]s Western firms didn’t figure out China in their first years. Chinese firms need teamwork by local and PRC leaders, managers and experts from the early research onwards.
- TWO: Solid goals, flexible methods. Chinese firms who are super-flexible at home cannot lose their agility abroad. “China-speed” objectives can stay but HOW to get there must become a cultural variable, developed by hybrid Chinese-local teams.
- THREE: Global operations, local value. Localisation worked in China—now it must start abroad. To graduate as multinationals, Chinese firms must empower local workforce, delegate authority and even transfer technology when required.
To start or fine-tune your leadership team’s China-facing skills, check my Dragon Suit workshop and contact me for a custom proposal:
Comments