The following is the “Trilogy” of Chinese enterprises’ going out to sea strategy From “Ego, we, ego” recommended by recordtrend.com. And this article belongs to the classification: network marketing.
Chinese mainland China has China’s “sea going” since China’s reform and opening up, which has been accompanied by the deepening of the integration of China and the world and the rising status of Chinese enterprises in the world arena. In 2015, China’s foreign direct investment (ODI) exceeded FDI for the first time in real terms, while in the 2020 Fortune Global 500, the latest mainland China (and the four) For the first time, the number of enterprises in Hong Kong surpassed that of the United States and ranked first in the world.
At the same time, in recent years, due to frequent international trade frictions, increased global financial volatility, geopolitical risks and other factors, Chinese enterprises are also facing unprecedented challenges when they go to sea. How can Chinese enterprises achieve business success overseas? What are the success factors and breaking skills of different stages of going to sea?
Trilogy of Chinese enterprises going out to sea
Based on the observation of the practice of multinational enterprises at home and abroad, it can be found that although the motives, destinations and specific ways of going to sea are different, the process of going to sea can be generally summarized into three stages, namely “small self”, “we” and “big self” (see Figure 1)
Stage 1: for the first time to go to sea or the enterprises whose overseas business is still in its infancy, it is imperative to survive in the overseas market and achieve steady development. Therefore, at this stage, enterprises pay more attention to the “ego”, that is, the enterprise itself, and achieve a foothold in the target country through its own business development and participation in the local market competition.
Stage 2: with the continuous increase of overseas business scale and internationalization degree, Chinese enterprises have increasingly close contact with many key stakeholders (such as business partners, industry associations, scientific research institutions, etc.) overseas and local, and create a better business environment for enterprises through the construction of ecological environment. At this time, the scope of concern of enterprises is extended, and the collection of enterprises and key stakeholders forms “we”.
Stage 3: with the further improvement of the influence of enterprises in overseas and local areas, enterprises are no longer limited to a business organization, but also an important member of the local society. By fulfilling the corporate statesmanship of enterprises, leading the shaping of public policy framework, and deeply integrating with local society in many aspects, such as corporate social responsibility (CSR), energy conservation and emission reduction, so as to improve social welfare, at this time, enterprises have entered the “big self” state, and the scope of concern has already gone beyond the commercial interests themselves. As mentioned in the Business Roundtable statement signed by more than 180 CEOs of top companies in the United States, “the interests of shareholders are no longer the most important goal of a company. The primary task of a company is to create a better society.”.
For Chinese enterprises, no matter what stage they are in, they will face many challenges from themselves and the external environment. What are the success factors of different stages of enterprise’s sea going strategy? How to deal with the challenge of going to sea? The following three stages will be expanded respectively (see Figure 2).
1. “Ego”: practice basic skills well
When an enterprise is small or in the early stage of going out to sea, the survival as a “ego” in the overseas market is the top priority. Whether it is the organic development mode of setting up subsidiaries overseas or the inorganic development mode of merging and integrating overseas targets, Chinese enterprises are facing a series of challenges to go out to sea, and need to train their basic skills to cope with market competition.
1. Organic mode:
Build an international talent team
Throughout the successful international enterprises, a strong talent team is often a necessary condition for enterprises to establish their core competitiveness and stand out in the fierce international competition environment. Looking at themselves, there are many challenges in the management of internationalized talents in Chinese Enterprises: unclear positioning of internationalized talents, insufficient ability to obtain excellent internationalized talents, and the mechanism of talent development and retention to be strengthened. At the same time, the pursuit of top talents by international multinational enterprises is becoming more and more intense. Internal and external factors mean that the international human resource management of Chinese enterprises needs to be strengthened. Specifically, Chinese enterprises need to do a good job in talent management in three aspects
Talent positioning and planning: it is necessary to make clear the types and positions of international talents needed by enterprises, and make a forward-looking analysis on the supply and demand of international talent market (Strategic workforce planning), so as to promote the implementation of follow-up human resource management.
Talent attraction and recruitment: establishing an attractive global employer brand (EVP) is crucial for attracting international talents. Chinese enterprises need more distinct employer brand positioning and communication, in order to gradually enhance the understanding of local talents to Chinese enterprises and get rid of misunderstanding.
Talent development and retention: for international talents, a perfect talent development and training system, a reasonable salary incentive mechanism, and an inclusive corporate culture are extremely important.
Samsung group of South Korea has many advanced practices in the construction of international talent team. In line with its global business expansion, Samsung established the global strategy group in 1997. By recruiting and training MBA and professional managers from internationally renowned universities, Samsung has promoted the globalization of the organization and strengthened the “three-star” of these international talents. At the same time, Samsung has positioned itself as an employer brand all over the world, emphasizing the culture of equality and freedom and attaching importance to talents, so as to enhance its attraction to international talents.
2. Non organic mode:
Optimizing merger and acquisition integration strategy
For some Chinese enterprises, in order to obtain market opportunities, profit margins or strategic resources, direct merger or acquisition of overseas targets is also one of the strategies to go to sea. However, Chinese enterprises are facing challenges in different stages of M & A integration, and need targeted solutions
Before M & A, the foreign investment decision-making mechanism of Chinese enterprises is not perfect. The scientificity and transparency of overseas investment decision-making process of many Chinese offshore enterprises need to be strengthened, including clarifying the purpose of overseas investment, establishing a clear and systematic investment process to control investment risk, and supporting decision-making by trading teams with relevant expertise.
After M & A, the relevant governance control and organizational structure settings are not suitable for the demands of international development. First of all, for corporate governance, it is very important to set up a board of directors with strong independence, high transparency, professional ability and international vision. At the same time, enterprises need to set up a reasonable global organizational structure based on the diversity of their business and the particularity of their destinations. Finally, enterprises need to think about the management and control relationship of overseas companies, and confirm the distribution of rights and responsibilities between headquarters and overseas subsidiaries in the fields of people, finance, affairs, etc. under different management and control modes.
Taking a large state-owned diversified holding group as an example, in order to realize the comprehensive, professional and scientific evaluation and risk control of overseas investment projects, the enterprise has established the investment and risk management committee system on the one hand. The members of the Committee include the heads of strategic, financial, legal, audit and other major functional departments. They conduct targeted evaluation on investment projects from a professional perspective, and employ external experts to conduct independent evaluation on projects as appropriate. On the other hand, the company has set clear evaluation criteria and score cards for overseas investment risks, and has established a strong quantitative analysis team to provide detailed analysis based on solid data for Investment Committee and trading team to evaluate investment, including cash flow and return of the project, and simulate the impact of different scenarios.
2. “We”: building a circle of friends
With the increase of overseas scale and influence, Chinese enterprises are no longer independent individuals in the local market. Instead, they need to build their own “circle of friends” and create a better business environment with “small partners” by establishing contacts with various parties. Based on the common challenges of going out to sea and the advanced practice of foreign enterprises, Chinese enterprises can adopt three key points to build a circle of friends in the “we” stage.
1. Build friendship and make a forest of trees
In the past, many Chinese enterprises that went out to sea often limited their interaction objects to the narrow scope of customers and suppliers, and they were often “helpless” in the face of crisis. With the continuous improvement of the strength and voice of Chinese enterprises in technology research and development, business innovation and other aspects, the boundary of friendship building also needs to be further widened. Focusing on specific topics of technological change (such as big data, artificial intelligence, etc.) and business scenarios (such as mobile payment, etc.), Chinese enterprises can build ecology and support each other with local business partners, association alliances, R & D institutions, etc., so as to realize “forest of trees”.
Taking Volkswagen as an example, in recent years, Volkswagen has actively responded to the call of the Chinese government to build an alliance of interests in China around the two themes of new energy vehicles and smart travel. In 2017, VW China and JAC set up a joint venture, JAC Volkswagen, to jointly develop and produce new energy vehicles. In May last year, VW also took a stake in battery supplier GuoXuan high tech, creating a new cooperation mode for the industrial transformation and upgrading of China’s new energy vehicles. In addition, Volkswagen, through mobility Asia, a wholly-owned subsidiary of smart travel, has joined hands with didi to develop the online car Hailing travel market, and has cooperated with gofun, a subsidiary of Shouqi, to develop the time-sharing rental travel market and lay out the future urban public transport travel.
Targeted and efficient communication
In addition to building friendship, Chinese enterprises need to pay more attention to external communication strategies. Communication does not lie in high frequency, but in high efficiency. By adjusting the communication strategy and rhythm according to the characteristics of different stakeholders, we can better maintain the corporate reputation and brand image. For example, it is usually effective for enterprises to use the strategy of “holding high and fighting high” to obtain government support, while it is more flexible for the media.
Microsoft’s communication strategy for government agencies can be used as an advanced practice for reference. On the one hand, Microsoft builds a professional team responsible for government communication to ensure smooth communication. For example, its specially established EU government affairs division recruits politicians including former diplomats to strengthen communication and cooperation between Microsoft and EU agencies and Member States. On the other hand, Microsoft shares its views on topics of great concern to the EU, such as digital policy making, in the form of EU policy blog.
3. Long term planning and action
Compared with foreign well-known enterprises, Chinese enterprises pay too much attention to short-term interests and lack of local long-term planning in overseas business cooperation and R & D activities. Take school enterprise cooperation as an example, the cooperation between Chinese enterprises and overseas universities tends to pay more attention to R & D projects that are highly related to their own products and can be rewarded in the short term, while the investment in long-term research is insufficient, which is in sharp contrast to the continuous investment of foreign enterprises for decades. Facing the future, when Chinese enterprises go to sea, they need to further consider the long-term planning in the destination country, formulate corresponding strategic measures, resource investment and review evaluation mechanism, and show the long-term commitment to the relevant stakeholders through practical actions.
Toyota’s practice in robot R & D is one of the cases worth learning: Toyota’s R & D activities in countries around the world have a long-term vision, and since 2015, Toyota has put its open innovation platform into practice Platform) is open to global partners. Participants can develop future oriented innovation ideas on the innovation platform, and verify them in real environment with the help of Toyota technology, so as to accelerate the development of cutting-edge technology.
3. “Greater self”: fulfilling the public mission
With the further improvement of scale and influence, “enterprise” is no longer just a business concept, but to integrate with the whole society, so as to realize the “big me” realm of “I have you, you have me”. At this stage, China’s offshore enterprises and their CEOs should not only pay attention to the compliance of corporate responsibility, but also be committed to fulfilling the corporate statesmanship of enterprises. By shaping the public policy framework and promoting the collective action of the whole society, they can create business value for enterprises while realizing the well-being of the whole society.
In essence, corporate responsibility is a long-term self-interest maximization: the company ensures not to damage its own environment by fulfilling its obligations in society, environment and sustainable development, so as to avoid damage to its own interests. Therefore, corporate responsibility is an individual action compatible with the common interests of the enterprise and the society, and it is “doing a good job” within the established policy framework.
Public mission goes further than corporate responsibility. It aims to shape a better policy framework to promote public and individual interests, and to change the rules of the game by influencing collective will and action. On the surface, participation and promotion of public affairs seem to be of no value to the short-term financial performance of a single enterprise. In fact, enterprises that only consider their own interests are like prisoner’s dilemmas in trouble. They choose the suboptimal solution for the whole society / industry based on competition and game. Only when all enterprises strive to move towards the “big self” realm and cooperate with each other, can they realize the better optimization of the overall interests.
Taking Volkswagen, which has experienced the “exhaust valve” incident, as an example, in an interview at the end of 2017, then CEO Matthias m ü ller believed that the government should abolish subsidies for diesel vehicles and use them to support the development of electric vehicles. This triggered a wide discussion within the EU: since nearly half of the new cars sold in the EU every year are diesel vehicles, the proposal of Volkswagen, the industry leader, will trigger a fundamental change in the entire transport industry. However, it is under the leadership of automobile giants including Volkswagen that the transformation of transport electrification and environmental protection and emission reduction of the whole EU can be further promoted.
The trilogy of Chinese enterprises going to sea not only reflects the thinking of commercial and social values, but also contains profound philosophical ideas. From “small self” to “we” means to transcend the enterprise itself, and the extension of the concept of “I” coincides with the Confucian realm of “self”; from “we” to “big self” means that the enterprise transcends the commercial attribute and embraces the social attribute, which can be described as the interpretation of “everything in the world comes from being, and being comes from nothing”. No matter what stage the enterprise is facing, it needs to make its own strategy clear.
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