Innovation & Entrepreneurship Key to Globalisation?
~ CEIBS Event Highlights Opportunities
April 21, 2017. Hong Kong – As the Chinese government pushes ahead with its clear focus on globalisation, high level players from the corporate world and academia gathered today to discuss how Hong Kong and the mainland can leverage new technology, innovation and entrepreneurship to optimise gains from an increasingly interconnected world. Among those making the case for globalisation was Chairman of the Sino-CEE Fund (CEEF) and Former Chairman of ICBC, Jiang Jianqing, who shared insights on the banking industry and financial innovation opportunities with more than 400 attendees.
“The world’s banking industry is undergoing an unprecedented digital revolution, which is a major challenge for the sector. Players from China’s banking industry should take a leading role in this historical transformation within the context of globalisation, to vigorously and steadily explore new opportunities,” said Mr. Jiang who is also Adjunct Professor of Finance at China Europe International Business School (CEIBS), the hosts of today’s event.
Mr. Jiang Jianqing, Adjunct Professor of Finance at China Europe International Business School (CEIBS)
According to Prof. Jiang the banking sector is facing challenges from competitors who are increasingly technologically savvy. Innovations in the field of finance have also seen third party players assuming roles traditionally filled by banks. In order to realise financial innovation in the banking industry, said Prof. Jiang, even as they accelerate the processes of informatisation and digitisation, banks will need to continue enhancing their three core areas of competitiveness: a mature credit system and strong reputation for credibility, high-quality financial data, along with expertise in asset transformation and risk management. “Today in the overall financial industry there is a major trend towards digitisation and doing transactions online,” he said, noting that this transformation has seen a change in the role of banks. They are no longer merely providers of financial services. “Successful banks of the future will be those which are data-savvy,” said Prof. Jiang, “and those that know how to proactively leverage the internet and new technologies to provide more innovative services and products.”
Prof. Jiang’s comments carry weight as he knows well China’s banking industry from his 16 years at ICBC as Chairman, he is Director of the highly regarded think tank CEIBS Lujiazui Institute of International Finance (CLIIF), and he is Chairman of the very influential Sino-CEE Fund (CEEF). The Fund is a vital plank in the Chinese government’s effort to deepen ties with Central and Eastern Europe, as China puts measures in place for the smooth operation of its ambitious Belt and Road Initiative. That Initiative is inextricably linked to the Chinese government’s efforts to ensure that the current wave of globalisation can tangibly benefit more countries along the Belt and Road. In addition to getting government-level global support, the ordinary man on the street and business community will also need to be made aware that globalisation can be a force for good. One business magnate who clearly knows the value of going global is TCL Group Chairman Li Dongsheng. His company was one of China’s earliest to make globalisation a part of its strategy.
TCL Group Chairman Li Dongsheng
Mr. Li still remembers the controversy that surrounded his company’s first efforts to go global. “People were wondering whether TCL would be a martyr or a pioneer in overseas M&As? I told them that one cannot be a successful pioneer without possessing the bravery of a martyr.” Two M&A projects in 2003 laid the foundation for TCL’s future success in its smartphone and television businesses. The company has mirrored changes in China’s manufacturing history – moving from imitation, to innovation. Its next step: smart manufacturing. “Many people are not clear on the difference between smart manufacturing and automation,” explained the expert.“The latter means, for example, a machine can accurately repeat a certain movement to ensure effective production.Meanwhile the term smart manufacturing refers to the intelligentisation of machines – they have the autonomy of process design, they have the ability of judging whether a process is efficient or not.” Perfectly in line with China’s “Made in China 2025” initiative, smart manufacturing will be the next big thing for Chinese companies eying the overseas market – companies like TCL.
There are many lessons to be learned from TCL’s forays outside China. In fact the company’s ‘going out’ strategy has been used as the basis for one of the 36 globalisation-related case studies developed by CEIBS faculty over the years. The TCL case was authored by CEIBS Dean Professor Ding Yuan, who also did a case study on Lenovo’s global efforts and co-authored a newly-released book that looks at Chinese companies’ globalisation, cross border M&As and post-acquisition integration.
CEIBS Dean Professor Ding Yuan
In addition to being a hot topic for books, Chinese companies’ business deals abroad are increasingly grabbing the headlines. “Over the last decade, China's outward foreign direct investment has seen a 50-fold increase, reaching US$1.57 trillion in 2015. We have seen this tremendous growth because both sides can benefit from these partnerships: China offers a large market and investment funding, while the overseas companies have abundant natural resources, established brands, technical expertise and managerial competences. A win-win partnership is one that integrates the advantages of both sides,” explained Professor Ding. He also pointed out that Chinese acquirers are interested in importing the target firms’ advanced technologies and managerial know-how back to China so they can better compete domestically in order to become better prepared for future expansions in the world market. “When these deals are being brokered, Hong Kong – with its rich resources in providing professional services – is expected to play an important role as an intermediary hub between mainland China and the rest of the world in helping mainland enterprises go out,” he added. Professor Ding has hands-on experience with Chinese companies going global. He spearheaded CEIBS’ 2015 acquisition of the Lorange Institute of Business, Zurich and used the ‘light touch’ approach to integration – detailed in findings from CEIBS’ Centre for the Globalisation of Chinese Enterprises – to ensure the smooth transition in operations at what is now CEIBS’ Zurich Campus.
“In addition to our overseas locations and the events we host in major cities around the world, an integral part of CEIBS’ role is providing the knowledge and support our students and alumni – both Chinese and non-Chinese – need to lead in a globalised world,” explained Professor Ding. “For example this year, we began offering an Executive Education course specifically for the heads of Chinese companies’ overseas operations, persons who plan to run businesses that will operate globally, or expats working for Chinese firms. The goal is to provide the knowledge they need about the globalisation of Chinese companies and an understanding of the strategic choices and development patterns companies need to master in order to successfully integrate themselves into today’s globalised world.”
CEIBS’ commitment to globalisation can also be seen in its efforts at knowledge dissemination. Today’s event in Hong Kong is just one of seven being held outside mainland China this year. These events are an effective platform for continued learning for the school’s more than 19,000 alumni, spread across more than 80 countries and regions around the world. The events are also an opportunity for the wider public to gain a better understanding of China knowledge within a global context.
China Europe International Business School (CEIBS, www.ceibs.edu) is among the top international business schools in Asia. It is the only business school in Asia to have simultaneously made it to the Financial Times’ top 30 list of MBA, EMBA and Executive Education programmes. CEIBS’ world-class faculty – from both China and abroad – are experts in their fields. CEIBS has provided management education to over 130,000 executives both at home and abroad. CEIBS has campuses in Shanghai, Beijing, Zurich and Accra and a teaching centre in Shenzhen.