Chinese firms in US upbeat
Updated: 2013-02-23 07:29
By Chen Weihua in Washington and Li Jiabao in Beijing (Agencies)
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Another finding in the poll is that six in 10 executives said it's "very easy" (28 percent) or "somewhat easy" (33 percent) to do business in the US. It has been "somewhat difficult" for 35 percent and "very difficult" for 4 percent.
Four out of five executives identified competition from existing US companies as a challenge, with 53 percent describing it as "major" and 31 percent calling it "minor". Only 14 percent said this isn't a challenge.
According to Kraus, attitudes about competition are shaped by the industry a company is in. Some are fiercely competitive, dominated by entrenched players with long histories and strong brands.
"I think it also has to do with the fact that Chinese brands are not very well known in the US," the APCO chief said. "Chinese firms inevitably will have to do more to build awareness and promote their products to US consumers. This takes time and money."
Although the US is generally known for its skilled work force, a third of Chinese executives said finding qualified people is a major challenge.
Respondents were splintered when asked to compare the challenges they face with those of other foreign companies in the US. A total of 18 percent said Chinese firms face more challenges, 39 percent said "somewhat more". To 41 percent, Chinese companies and their non-US counterparts face about the same number of challenges. Only 2 percent had faced "fewer" or "a lot fewer" challenges.
Those surveyed offered insight into what is crucial for success in the US market: hiring or contracting local experts and staff, understanding cultural differences, knowing the regulatory environment, patiently investing for the long term, and focusing on high-quality products and services.
Among the words of advice imparted by executives who responded to the survey:
Hire Americans to run the business in the US, and understand how to do business in America.
Localize; you have to operate as a US company and not as a China company.
Recognize the culture and mesh with it instead of fighting it.
Make sure all have good communication with regulatory bodies.
Hire someone from the US as a company representative to manage the business. Chinese don't know the people or have the expertise doing business in the US since it is so different from the way business is conducted in China.
It takes time to get success - at least five years.
Look for the long term, and look for major investment or don't bother.
Have control of quality and production standards.
APCO's Jarrett said the survey shows that Chinese companies can succeed and shouldn't feel hesitant about a foray into the US.
"They should do very careful preparations," he said. "They should assess the risk and understand the business environment. They should be aware of the community they invest and operate in, and build relationships with the media, the community itself and various regulators.
"The learning curve could be accelerated if they do more to engage a broad range of stakeholders."
Karl Sauvant, a Columbia University professor and an expert on Chinese and international foreign direct investment, believes Chinese can learn from the experience of Japanese firms that began entering the US in the 1980s.
Back then, US-Japanese relations were characterized by trade friction, controversies over currency exchange rates, concerns about the nature of the Japanese economy, fears of Japan's ascendance, cultural misconceptions and Japan-bashing among US media outlets and politicians.
Despite these conditions, Japanese direct investment in the US rose from less than $1 billion a year throughout the 1970s to a peak of $20 billion in 1990. That sparked scrutiny and a backlash in the US, Sauvant said.
"Yet today, Japanese firms are firmly implanted in the US. They have become an integral and valuable part of the country's economic and social fabric, and Japan remains an important source of FDI," he said.
"The basic answer is clear: Chinese firms, like those from other countries before them, need to become insiders in the US, and they need to build up a positive company brand name. Various strategies can be pursued to that effect."
These strategies, according to Sauvant, include scrupulous adherence to local laws and regulations, integration into communities and enhancing corporate social responsibility.
Viking Weiqiong Tao, of the Dallas law firm Kane Russell Coleman & Logan, said Chinese companies are paying more attention to that last principle.
"Some are purely pushed by outside pressure, because if you don't comply with certain codes of conduct, you are not even allowed to join the bid" for an investment, she said.
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