The “New Made in China” is Going Global

09/05/2019

How Chinese companies are perceived by the public in different markets around the world and how Chinese business change its strategy to be more open and global: going overseas is the answer

 

Nowadays PRC is arise again as superpower, from the “factory of the world” to the world forerunner. After the end of Cultural Revolution, nobody could imagine that China could sit again on the same table of world’s superpowers. Today PRC is the second economy in the world, finch and hi-tech leader and so far from utopist dream of Chairman Mao. Chinese firms are going global.

 

©Brunswick, Top leading PRC companies divided by market and region.

 

Xiaomi is leader in smartphone market in India, while Alibaba is ruling e-commerce environment in China and Southeast Asia both. In last few years, since Xi Jinping was elected PRC’s President, Chinese firms have significant investments and ambitions for growth. From Brazil to Europe, from Africa to US, economists have two main questions: which are the markets that Chinese industry leaders are eyeing for growth and how welcoming local communities are to Chinese companies?

Despite trade tension between world two largest economy, Chinese firms still have great opportunity for international investment, plus, other markets perceptions of China’s global growth remain broadly positive. The main reason is the generally positive views and perceptions of PRC companies, plus, overseas public opinion stimed as positive alternative the innovative force of Chinese firms. Technology and innovation are viewed as particular areas of strength, although concerns remain about IP theft and transparency. By the way is interesting to note how US is still Chinese business leaders top priority market for international expansion, but challenges remains.

 

China’s global expansion is particularly strong in countries positioned along China’s Belt and Road Initiative, especially as contrasted to Western countries.

 

As China’s economy continues to cool after decades of explosive development, more businesses are looking abroad for growth opportunities. Chinese leadership see “New Made in China” international expansion as a core pillar of country’s sustained growth. Nowadays PRC companies see opportunity for growing sales in the mainland – focusing they efforts on lower tier cities – but they are also increasingly looking further afield.

This is a long- term trend that is changing the global business landscape, with implications for business owners, investors, workers, and consumers alike. Actually almost 50% of Chinese companies such as hi-tech or automotive, reporting that exports and sales overseas have become much more important in the past year. What is the final destination? A mix of both Western markets and developing markets in Asia.

 

©Brunswick, Concern about the amount of inbound Chinese investment exists in most markets.

 

The future, for many Chinese companies, is outside of China and expansion abroad is generally acknowledged by Chinese investors as necessary. As reported by Brunswick, the scope of China’s global ambition is also widening, to include a mix of developed Western markets, its neighbors in Asia, and other developing economies. Beyond the US, business leaders look to Southeast Asia (30%), East Asia (22%), Australia (21%) and the UK (20%) as top growth opportunities.

“Made in China” is strong, but poses risks. Nevertheless a general positive overview concerning “Branding China”, still there are differences among markets. First global audiences tend to see Chinese companies through the lens of how they see China, such huge mistake because they don’t shift politics from business.

 

©Brunswick, Nearly every country has a favorable view of Chinese companies; US and Czech Republic are the only countries with divided perceptions.

 

China is recognized for its strong performance in innovation and research, an area of great promise that also carries risk, outbound companies must be sensitive to nuanced regional views that carry unique reputational challenges. Chinese business leaders are strongest along the Maritime Silk Road, while in Western nations (mainly US, Europe) are more skeptical.  Belt and Road nations are, actually, divided in three poles. South Asian nations, Middle East and Africa report “very favorable” views toward Chinese firms at a much higher rate than in the US and European nations. Such substantial opportunity to Chinese companies to improve how they explain to the world who they are, how they operate, and their commercial goals in order to build greater trust and credibility.

 

©Brunswick, Chinese companies are not evaluated as positively as British, Japanese, German, French, and US businesses.

 

Communication is very important, for Chinese company too. Awareness of Chinese companies and their goals is another metric that varies regionally, with populations in BRI markets reporting higher exposure to information than other nations or Western markets. When appraising their familiarity with Chinese business, Africa (74% familiar) South Asia and the Middle East (76%) report the highest levels of familiarity, followed by Central Asia and Eastern Europe (60%), with Europe (40%) and the US (42%) in the rear, said Brunswick. That’s why, different regions require different communications approaches.

 

Today PRC is fintech and hi-tech leader and  firms such as Oppo, Xiaomi, Alipay, Vivo, JD and more are ruling new markets in Africa and south-East Asia.

 

In the past, China has always followed and imitated Silicon Valley, but in the mobile era, China is no longer a follower and “Made in China 2025” let the country became an hi-tech leader. China is not only the second economy in the world. Actually, the Middle Country is the second-largest spender on research and development (R&D) after the US, accounting for 21% of the world’s total of nearly $2trillion in 2015. In 2017 the amount touched $254 billion. China has also been the world leader in patent applications for the past seven years, with 1.36million patent applications filed in 2017. Thus, Where are Chinese firms perceived to be the strongest by international audiences? Innovation leads the way.

 

What about Europe? Challenging and opportunities in Brexit. In the meanwhile EU is still Chinese companies top investment target.

 

Many Chinese business leaders see current US-China trade tensions and Brexit as an investment opportunity. According to a report released by the Academy of China Council for the Promotion of International Trade (CCPIT), up to 78.63 percent of Chinese companies listed the EU as their top investment target. The report said Chinese firms had set up over 2,900 ventures in the EU by the end of 2017, covering 28 EU members.

If experts state that Sino- American economic relations in 2019 will be a mix of friction, accusation and negotiation, in the UK there is a general expectation that the UK-China trade relationship will be strengthen by  Brexit. Chinese investors see Brexit as an opportunity to ramp up investment in the UK. As stated Lord Charles Powell, Chinese companies can be confident that the UK market will remain wide open for Chinese investment. There may be some tighter screening of take-overs in sensitive sectors. But Post-Brexit Britain is committed to seeking a bilateral Free Trade Agreement with China and in all likelihood will want a bilateral investment treaty too.

 

 

 



 

 

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