Sander van't Noordende says Chinese companies going abroad need to employ people who understand different cultures. Feng Yongbin / China Daily

Many Chinese companies that have gone global have had less than sterling success, and one expert says that if they are to do better a new approach is needed

It worked for Apple, and it may just work for China too.

In 1997, just as the ailing US computer company was on the cusp of its renaissance, it adopted the marketing slogan "Think different".

Thinking differently is exactly what one management consultant reckons Chinese companies need to do if they really are to make it big overseas.

That need was highlighted in a recent survey by Accenture Management Consulting that showed just 37 percent of Chinese companies that had gone overseas in the past few years believed they had benefited from the move.

When Chinese companies dream of becoming global, they should start to organize things in terms of business process, operations, ID systems and leadership development, says Sander van't Noordende, 50, Accenture's group chief executive.

"You start doing things differently, not just by having one or two operations overseas. So I think Chinese companies should start by doing things differently today."

Van't Noordende, who was visiting Beijing recently, says Chinese companies have taken great strides in going global in the past few years.

"Chinese people are very open to learn, and they are very outgoing in exploring the world. I think Chinese companies can take advantage of that."

There are now 20 times as many Chinese companies overseas than there were 10 years ago, Accenture said in its report published on May 14.

Yang Wei, vice-president of Accenture's China operations, says the main motives of Chinese companies going overseas have changed a lot in the past three years.

"The main aim used to be to grab a bigger share of the foreign market, but now they are also moving up the value chain, which shows that the paths that they take overseas have changed."

The quest by Chinese companies to climb the global value scale and seek new growth points has become even more pressing as the country's advantage in producing goods cheaply has begun to fade, Yang says.

Chinese companies used to invest mainly in developing countries but in recent years have switched their attention to developed countries and regions, such as Europe and the United States.

In future, Chinese companies will also attach more importance to innovation and research and development, increasing their brand recognition as well, Yang says.

But Chinese companies going overseas also face many challenges, she says.

First, many make the move just for the sake of being international, but with no other clear aim.

The headquarters of Chinese companies have a great deal more power compared with that of their counterparts elsewhere in Asia, and this concentration of corporate heft hampers decision-making, she says.

It is also a challenge for Chinese companies to attract and retain talent there, and to motivate such people to give their all for the company.

The fact that only 37 percent of Chinese companies Accenture surveyed reckoned they had ended up ahead by going abroad points to the unhappy experience most have overseas, she says.

"Although the number of companies making the move has grown rapidly, the scale of overseas investment by Chinese companies is still tiny compared with that of the EU and the US. Revenue from overseas operations has been relatively low."

Although more Chinese companies are ranked in Fortune magazine's Top 500 companies, not one Chinese brand is among Top 100 brands, she says.

Despite the increasing challenges and difficulties, 43 percent of the Chinese company leaders surveyed still nurse ambitions to go global, the report says.

To reduce risks and gain more from doing so, Chinese companies should first improve their competitiveness at home, Yang says.

Van't Noordende echoes Yang in saying that for Chinese companies going global, knowing why they are doing so is critical.

"Do you want to follow your customers, or do you want to explore new markets, or are you looking for technology or capabilities?"

Some Chinese companies looking for resources such as oil, gas and metals are very clear about what they want. Increasingly, more companies are also looking for technological capabilities.

Van't Noordende says product differentiation is also crucial. The Chinese company should think that "if I'm going to send my products or services to Colombia, how am I going to be different from other competitors who are already in the market?"

When Chinese companies go abroad, employing people who can understand different cultures and speak the relevant languages is also important, he says.

"So understanding customers in other markets, understanding the regulations and how business is done in other markets is extremely important."

Failure to understand those things is the main reason for failure overall, he says.

"My suggestion for the bosses of Chinese companies that want to go abroad is to try to understand the company, the culture and the country. Make sure you start to find out how things work and try to collaborate and accommodate with challenges along the way. Don't think, 'My management style will work in another country,' because it won't."

What Chinese companies should learn from Western companies is that they are not just "international companies", he says. They are "global companies", too.

"International companies (are ones that) have business activities overseas, but a global company is more balanced regarding where the customers are and where the revenue comes from. International companies may gain 98 percent of their revenue from China and the rest from two other countries, but global companies like Accenture get revenue from 45 countries."

Chinese companies will catch up with Western companies very quickly because China has very large home markets, he says, which means they have a very strong base and a lot of money to do business.

"Chinese companies have been going international for 10 years; European and American companies have been going international for 100 years. I think in another 10 or 20 years Chinese companies will be more mature.

"You should never stop learning, because even the world's biggest global companies are still learning to do business in Latin America and Africa. But things are moving fast. I think Chinese companies will catch up quickly."

Contact the writers at huhaiyan@chinadaily.com.cn and chenyingqun@chinadaily.com.cn

(China Daily European Weekly 05/31/2013 page21)