Lecture 10 International Operations of Chinese Enterprises

1. Lecture 10 International Operations of Chinese Enterprises

2. Chinese Enterprise’s Forms of Ownership • State-Owned Enterprises (SOEs): central or local government owned business • Major transportation: motors, planes, ships, railways & trains, national freeway network, airlines, etc; • Financial services: banks, insurances • News & publications: TV & broadcasting, newspapers, press, publishing house, etc. • Public services: hospitals, educations, power and water supply, etc.

3. Hi-Speed Train (350km/h)

4. China’s Big Plane Project to Compete with Airbus & Boeing

5. Chinese Enterprise’s Forms of Ownership • Private enterprise • Town & village owned • Family-running business • Public listed companies (Shenzhen, Shanghai) • Joint ventures • State-foreign (very important ones) • State-private • Private-foreign • Wholly foreign-owned enterprises: hi-tech,

6. Organizational Structure and Leadership • Private enterprises • Town/village owned enterprises: • Family running enterprises: blood linkages, relatives and friends • Public listed: as in the west • JVs or FOEs • By the board or negotiation.

7. Management styles SOEs: double-headed management, normally the party leaders are the top leaders. Management styles: mostly autocratic for SOEs or private companies

8. Public relations & Internal Communications • PR is very weak: • No official PR officers, normally by the party or company leaders. • Is not considered as important • Internal communications: • Hierarchical • Paper works, documents • Gossips

9. Chinese enterprises’ global strategy Drivers for Chinese enterprises’ globalization: • Energy & resource oriented • Technology, R&D oriented • Brand oriented • Market oriented • Cost oriented • Overcoming the trade barriers

10. The strategic choice of Chinese International Business • Import & export • Joint venture in world • M&A overseas: Lenovo – IBM PCs dept., TCL – Thompson, Haire –GE household appliance (potential), etc • Greenfield plants: Haire worldwide, Huawei • Strategic alliance: China Southern – KLM – Air France • Government’s role of promotion: • Investment in Africa • Cultural promotion: the Confucius Schools worldwide • Innovation

11. Founded in 1984 in Qingdao Shandong The most famous corporation in China Haier The second powerful trademark in household-electric in 《Forbes》

12. Globalization Haier `s globalization turn to globalized Haier 1/3 domestic product sold in China Market develop Trademark develop 1/3 domestic product sold oversea 1/3 product made oversea sole oversea Difficult first easy second Investment Investment

13. Globalize the technology Globalize their mind Globalize human resource Core power Customers` market Quality is the trademark Haier college Indigenize the manager Globalize the product Creativity difference Turn to the service Research center ISO9001 Globalize the market American Europe Globalize the net Globalize the system Globalize direction Go to the oversea BPR The measures in the process

14. See more clearly

15. About Lenovo • A Worldwide Leader In Technology • Lenovo is an innovative, international technology company formed as a result of the acquisition by the Lenovo Group of the IBM Personal Computing Division. • As a global leader in the PC market, Lenovo develops, manufactures and markets cutting-edge, reliable, high-quality PC products and value-added professional services that provide customers around the world with smarter ways to be productive and competitive.

16. Motivation of Internationalization • Less developing space in domestic market • ailure in diversification →go back its main business • E.g.Lenovo Chairman Liu Chuanzhi shakes hands with IBM Vice President John Joyce after signing an agreement in Beijing, Dec. 8, 2004. According to the agreement, Lenovo will acquire IBM's entire global desktop and laptop computer R&D and marketing business at the price of US$1.25 billion.

17. Steps of Internationalization • Change to new logo in 2003--Internationalization strategy needs an international brand • Legend + NOVO = • LENOVO • 2004 - Become an Olympic TOP • 2004-2005 - Acquire IBM PC

18. Lenovo Chairman Liu Chuanzhi shakes hands with IBM Vice President John Joyce after signing an agreement in Beijing, Dec. 8, 2004. According to the agreement, Lenovo will acquire IBM's entire global desktop and laptop computer R&D and marketing business at the price of US$1.25 billion.

19. Benefits and Risks of the Deal between Lenovo and IBM • A Win-Win Deal • IBM: chance for more software, services and consulting deals in China • Lenovo: becomes a global player quickly • Risk in three areas • Customer integration • Cultural integration • Brand integration

20. China’s Lenovo is going to be the world’sLenovo • A worldwide partner for the 2008 Beijing Olympic Games and global Torch Relay • Lenovo and the NBA unveiled the Lenovo Stat to tip off the 2006/2007 NBA season • Lenovo has partnered with AT&T Williams of the Formula One circuit

21. Some challenges for China’s MNCs in the world • Food and product safety • Quality and brand image • Environmental protection • Human rights, labor laws or social/business ethics, etc • R&D, Innovation ability • Economic nationalism and protectionis

22. Sectors of opportunities in China • Service: financials, tourisms, transports, etc • New and Hi-tech products: software, IT, electronics, etc • energy and environment: nuclear power, waste treatment, etc • health-care: medical instruments, hospitals, nursing houses, etc