How Can Chinese Companies Succeed in the U.S.

Author: Joy Huang

Recently I conducted a research study trying to find some answers to the question "How can Chinese companies and executives succeed in the U.S.". During the study, I interviewed 30 executives and senior managers from Chinese and U.S. companies that have intimate knowledge about this topic. Here are highlights of the study findings:

Competitive Advantages

U.S. companies are impressed with Chinese companies’ production capabilities and high quality products in most cases. Technical expertise is cited as another key strengths of Chinese companies, particularly in technology-related industries. The successful companies listen to their customers well and are willing to put large amounts of resources to solve problems. They are deliberate with their approaches, maintain good communication and are willing to advance investment in product R&D ahead of financial commitments.

Short–Term and Long-Term

Chinese companies are commonly faced with a major decision to balance between short-term sales and long-term profits in the U.S. This usually means selling commodity products with high volume but low profit vs. specialty products with low volume but high profits. Many have difficulty justifying the additional upfront investments for specialty products that don't yield high volume quickly. U.S. companies express their wish for Chinese companies to evolve from commodity producers or OEMs to long-term strategic partners. For them, the ideal partners should not just "build to order", but also understand their business needs, are forward thinking and are willing to commit to the long-term success.

Business Development

Relationship is the foundation of doing business in China. Surprisingly, building relationship came up as an area that the U.S. companies hope the Chinese companies could do better. U.S. executives feel that their Chinese counterparts are not spending as much effort as their peers in bonding with them on a personal level. For Chinese executives, this is challenging due to their lack of comfort with the English language and cultural norms especially when it comes to one-on-one interactions. Some companies also rotate their U.S. local leadership every couple of years that can lead to disruptions and confusion in established relationships.

Talent Management

U.S. operations of even some of the largest Chinese companies are much smaller in scale due to the stage of their market development. They tend to be more like start-ups, which require management to act as entrepreneurs who are well rounded in more than one aspect of the business. This tends to create additional challenges for Chinese managers who typically have a strong background in technical fields or are domain experts in their respective fields. Most companies realize the need to localize their talents, but differences in cultural backgrounds and management styles can hinder their efforts. Successful companies keep an open mind and entrust people of different backgrounds. Often, however, non-Chinese employees feel they are limited in their career potential inside Chinese companies and wish they could be more fully entrusted and utilized.

Branding and Marketing

Branding and marketing are perhaps the keys to propel Chinese companies to the next level of going global and become truly first-class global companies in the future. They are also the least well understood within Chinese management. Some view branding as a goal rather than an experience, and seek quick results rather than giving it the necessary time to evolve. Resources allocated in marketing and branding is not nearly as robust as those in product and performances. There is, however, increasing awareness on the importance of branding and strong desires to achieve world-class brand status.

Intellectual Property (IP) Protection

The biggest challenge facing Chinese companies in this regard is the perception that as a group, they have little regard for IP. This can be particularly problematic in industries such as hi-tech and telecom. Some U.S. executives express sympathy towards them for being unfairly singled out among other direct or indirect “IP violaters” for political reasons. Chinese companies have much to do in this area in being more aggressive in protecting their reputation and addressing the surrounding American distrust of China.

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