Since the opening of its market to foreign investments in 1979, China has been fairly successful in attracting Foreign Direct Investments (FDIs). Recently, it has been the largest FDI attractor, even surpassing the United States in 2002. The World Bank reports that in the last decade, China has largely invested in developing countries and remains in the top-ten list of investors among all economies. MNCs from China have invested more than $50 bn worldwide in the last two decades. Although there are doubts in international market over the capability and preparedness of Chinese companies to go international, some Chinese MNCs have not only shown the way, but also created a niche for themselves in the international arena.
"As
Lenovo's founder, I am excited by this breakthrough in Lenovo's journey towards
becoming an international company", said Chuanzhi Liu, Chairman of Lenovo.
The IBM-Lenovo deal in late 2004 - a complex joint venture - has left Lenovo (formerly
legend) as the third largest PC manufacturing company globally after Dell and
HP. However, there are also some failure stories like the bid by China National
Offshore Oil Company Ltd (CNOOC) to buy Unocal. Although s point the failure
of the CNOOC-Unocal to the Government of United States, the point is that Chinese
companies seem to have the ability to go international. Nevertheless, one of the
major areas of discussion in the China Business Summit 2005 was whether the Chinese
companies were poised to leap international borders.
The
noted Indian columnist, Gurucharan Das maintains that business growth in China
is driven by the state, whereas in India it is not so. This statement is shared
by the international community who realize that business and society in China
are built, influenced, and even maintained by the government. However, some others
close to the business environment of China insist that this is only part of the
story. It is believed that the Chinese have built companies on low-cost manufacturing,
but they lack the managerial convergence to go international. As asserted by Paul
DiPaola, Managing Director, Bain & Company China, People's Republic of China,
"Regulators have been building strong Chinese firms since the 1990sthe strengths
of these firms are that they have very low-cost positions and great value engineers
they (Chinese companies) are critically short of talent and their management teams
spread very thin (and) their products are not unique enough - they need more product
innovation." This sounds like Chinese companies don't have much in them beyond
low-cost manufacturing, which is a tag that works well when the company operates
in China and enjoys certain operational benefits, such as low-cost labor. Norman
Sze, Managing Partner, Consulting, China, Deloitte (China), People's Republic
of China, shares the view that most Chinese companies are not equipped to go international. |
