ITL #131 C-H-I-N-A: Five strategic considerations for Chinese companies going global
9 years, 3 months ago
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Companies from China are conducting business internationally on an unprecedented scale. But communication misjudgements in markets such as the US may put a brake on growth. By Tom Ho.
China’s outbound direct investment is for the first time set to exceed investment into the country, highlighting the momentum of Chinese companies going global. In 2014, Chinese foreign direct investment (FDI) globally reached $101 billion and $12 billion went to the US. Alibaba’s listing in NYSE, Fosun’s aggressive acquisition globally and the battle of TV and smart phone market between LeTV and Xiaomi are just a few examples.
Tailored communication strategy and thoughtful trust building is as important as the business expansion strategy, if not more critical. This article outlines the five considerations Chinese companies shall take in their global journey.
C for critics – Listen actively.
In 2012, Huawei and ZTE faced congressional investigation with the accusation that the increasing dominance of its telecom equipment market gives China an opportunity to spy or conduct malicious activities. Today, media highlights that Chinese companies are "selling greencards to Chinese nationals" through the EB5 investor immigration program administered by the USCIS. The skepticism about Chinese companies’ entrance into the US market does not seem to die down with the increment of FDI and positive economic impact over the years.
Being looped in with companies acting unlawfully simply because of country of origin might be unfair and frustrating, but stereotyping and criticism is a reality of life. The wise position to take is to be all ears to your critics.
A Chinese CEO once told me that critics are their best friends who sound annoying but at times are right in pinpointing certain shortcomings. Her staff is encouraged to closely follow the criticism and treat critics as "free" internal auditors who would detect potential issues so that the company can address them promptly.
Most of the time, when opposing critics are so utterly biased, their views will not become mainstream and direct engagement with them might not be constructive. But when mainstream media picks up their view, with close monitoring and issue preparedness behind the scene, it enables the company to provide timely and convincing rebuttals.
H for Hierarchy – Localize engagement.
Like China, US government and politics have very complex dynamics and it is "insider baseball". From district councillors, mayors, governors, congressmen, senators to federal officials, they all have their own policy agenda and power play with each other. To make it even more nuanced, you have the layer of democratic and republican parties and the factions within each party. While some say the hierarchy in the US seems more transparent with abundant public information, it is by no means straight-forward when it comes to lobbying and engagement.
One common misperception by Chinese companies is that one needs to go as high-up in rank as possible when engaging government officials and politicians. Some would go directly to Washington DC and prioritize meetings with federal officials.
But the truth is, with regard to most investments such as real estate developments and manufacturing, the district councillors and the mayors are way more influential as they govern and set regulation in the area. The local officials are more motivated to have a meaningful dialogue as the investment will create jobs for their voters and have economic impact in their constituency.
On the other hand, never underestimate the influence of smaller local community groups as they often make perfect "victims" in media stories about foreign investment as the "villain". However, it is not to say that state and federal officials can be neglected. It really depends on the type of investment and business operations. For example, certain types of strategic investment in energy and infrastructure sectors are under the review of CIFIUS (Committee of Foreign Investment in the United States).
I for Influence – Start with content and conversation.
To build the brand in a new market, some companies choose high profile sponsorship, celebrity endorsement and huge spending in sports advertising. These might boost brand recall to a certain degree, but the awareness tends to be shallow and scattered among the wrong demographics. Influence will never come out of "talking at" people. Instead, it’s about relevant content and conversation.
As Google becomes the number one channel in information finding, a professional looking and lively English web presence with relevant content is very cost effective but under-utilized tools among most Chinese companies. To go beyond just introducing your company, business and leadership, the owned content shall include the point of view and spark a conversation with your stakeholders.
Alibaba has done very good job in this area. Their English journalistic-style e-commerce commentary site Alizila is regularly updated with company news, media stories, industry trends, point of view on issues, entrepreneurial stories with videos. Some of the content is syndicated on its LinkedIn page, serving not only an important tool for talent recruiting, but also a platform for stakeholder engagement.
N for Narrative – Build a vision with human stories.
A common mistake Chinese companies make in foreign markets is to purely focus on product marketing. Quality of products and services are certainly the fundamentals for any business to thrive. But it’s transactional. In the short term, you might win a customer by lower price or better functionality; but it doesn’t result in loyalty.
By contrast, your corporate vision and product story will go a long way. An appealing product without a trustworthy creator is like eye candy with no soul. No doubt, it takes time to tell the story but consumers buy the emotions and purposes in the story. It benefits not just the sales, but also gives an edge in hiring the best talent and fostering business partnerships.
Your narrative is your vision, mission and values illustrated by facts, track record and human stories of leaders, customers, products and partners. When going global, companies will often talk about their business plans and benefits to the local economy.
Taking a forward-looking approach is smart, but the leadership should also be able to articulate the backstory of the company in China and its evolution to global expansion. Some think being state-owned is a taboo and it’s better to not mention it. In my opinion, it is more constructive to embrace your company’s humble beginnings and link it to your commitment to the American market.
To avoid being relegated as just another Chinese company throwing investment in the market, it is key to establish the differentiation in your strategy. Lastly, when creating the narrative, less is more. Nail down three themes in crisp language with analogy and facts. Think in soundbites, don’t fall into the trap of long-winded Chinese rhetoric.
A for Affiliation – Relate with common interest.
Building guanxi (relations) is way beyond throwing rank or capital; it´s about common interest and shared goal. Before going out to "make friends", it takes robust research and mapping of the positioning and attitude of the influencers towards the Chinese investment.
Chinese media correspondents and business associations are definitely the starting point but nobody can afford to stop there. To truly become a corporation in America for Americans, it’s essential to create affiliation with American media, national and local business associations and NGOs. Money can’t buy you love but membership in chamber of commerce and commissioning of think-tank research helps build your network and presence, as well as provide market and business intelligence.
Your employees are sometimes the hidden gems of building affiliation for the company. The local hires and expats from China will together form a good network as a start.
The trick is to connect the dots between Chinese and American employees. Sometimes there’s a great divide between the two groups of employees which can create inefficiency and even jeopardize the business. Therefore, affiliation does not just refer to external relations, but also employee engagement. The leader needs to unify all the employees under a shared goal and encourage open communications, despite language and cultural barriers.
Compared to the billion of dollars Chinese investment and high business stakes, spend on marketing communication is disproportionately trivial. For Chinese companies to take a stride in going global, "walking the talk" with rigorous governance and quality operations and "talking the walk", with storytelling and public engagement, are of equal significance. The walk and the talk go hand-in-hand.
One tardy response in a crisis coupled with the lack of a credible third party ally could potentially cost the whole business, especially in an overseas market where scrutiny is intense. It’s high time for Chinese CEO to view their global expansion through the lens of CHINA elements.
About the author
Tom Ho is a vice president at Edelman New York. She has diverse experience in corporate affairs and marketing communications in Asia and the US. Throughout her career, she has provided counsel to the C-suites of Fortune 500 companies headquartered in the U.S. and China on their market entries and expansion across continents.
A veteran of public engagement with over fourteen years under her belt, Tom brings diverse experience in corporate affairs, marketing communications and business development. A self-starter, Tom moved to New York in 2013 to elevate her portfolio in strategic communications across sectors, including technology, education and public infrastructure.
A Chinese native from Hong Kong, Tom has a global mindset and a deep understanding of cross-cultural nuances. Throughout her career, she has provided counsel to Fortune 500 companies headquartered in the U.S. and China on their market entries and expansion across continents. During her career at Edelman, she has led the brand building for a Chinese company with USD6 billion investment in the US, strategized the communications for a top Chinese university globally, launched a US private art and design university in Hong Kong, built the thought leadership platform for a e-commerce giant in Greater China and evolved the positioning through PR and marketing of a leading gaming console in Asia Pacific region.
Tom is passionate about empowerment through education and sustainability, and she is dedicated to contributing to charitable organizations. In partnership with World Wildlife Fund (WWF), she has led a communications campaign that mobilized three million businesses and individuals to participate in Earth Hour Hong Kong.
Tom is fluent in English, Mandarin and Cantonese. An enthusiastic traveler, she has set foot on six continents.
The Author
Tom Ho
Tom Ho is a vice president at Edelman New York. She has diverse experience in corporate affairs and marketing communications in Asia and the US.
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