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Friday, June 30, 2017

Globalization Strategies for Chinese Companies

June 30, 2017. Shanghai – Chinese companies’ strategic paths for globalization and the lessons they have learned through overseas mergers and acquisitions were the focus of discussions today at the CEIBS Globalization Forum held at the Petrochemical Auditorium on CEIBS Shanghai Campus. More than one hundred Chinese executives turned out for the event, which was moderated by CEIBS Associate Dean (Europe) and Professor of Management Katherine Xin.

In his opening address, CEIBS President and Professor of Management Li Mingjun noted that China’s Belt and Road Initiative provides many opportunities for Chinese companies with a global vision. Yet globalization also brings many challenges and requires a solid understanding of the foreign investment environment, culture, and regulations as well as certain talent management skills. In response, President Li explained that CEIBS has launched a new Executive Education Programme, “Key Talent Programme for Chinese Companies Going Global”. Designed for executives who run the international business divisions of Chinese companies, the programme aims to provide participants with an in-depth understanding of the core issues companies must consider when going global, including strategy, tactics, M&A risks, and cross-cultural team management and leadership. The programme begins September 26, 2017 at the CEIBS Beijing Campus.

“Strategies and Motivations for Chinese Companies’ Globalization” was the title of a speech given by Associate Dean (Executive Education) and Professor of Marketing Wang Gao. He discussed how Chinese companies can improve their value creation capabilities by investing in overseas companies with superior technology and management know-how, and then introduce those into their domestic operations to improve their competitiveness in the Chinese market. He explained that due to China’s large market, this is often the best globalization path for Chinese companies, and it differs from Western companies who are typically motivated to go global by the need to increase their market share outside their domestic market. Professor Wang Gao illustrated this with the practical case study of CEIBS alumni company Biostime, which is explained in the new book The Path of Globalization – Chinese Companies’ Overseas M&A and Integration that he co-authored with four other CEIBS faculty members.

Professor of Finance Wang Cong gave an overview of Chinese companies’ overseas M&A activities over the past two decades. He explained that Chinese companies have sometimes paid a premium when doing overseas deals, and they often face difficulties with cultural conflicts and when dealing with unfamiliar government regulations and labour unions. He also said that foreign deals may entail a complicated and lengthy approval process. He said that Chinese companies should also keep the difficulties of integration in mind, and he recommended Chinese entrepreneurs should explore relatively small-scale targets in order to increase their alternatives. Professor Wang Cong also noted that while many Chinese enterprises have bought American and European companies, companies in the countries involved in the Belt and Road Initiative can also be potentially good targets.