The key to doing business in China, and to Chinese firms expanding into other countries, is thinking locally, U.S. and Chinese technology firm executives advise aspiring entrepreneurs. International businesses flop by implementing existing business models in China instead of sagely adapting to local culture and Chinese firms risk similar failure if they don't use similar wisdom when moving abroad. The theme was echoed on May 2 by executives that shared insights with nearly 2,000 U.S. and Chinese entrepreneurs gathered at a Hua Yua Science and Technology Association conference.
While corporate giants such as IBM, Volkswagen, Starbucks and McDonald's are succeeding in China, powerhouses such as software colossus Microsoft and Google aren't, said Focus Media president Tan Zhi. The difference between failure and success depends on companies' abilities to adapt to the Chinese palette, according to Tan. "McDonald's and Starbucks have created flavors to meet local needs, so they are successful," Tan said. "I worked at Microsoft and know how hard it was to convince my boss in (Redmond, Washington) to change a little bit."
"Microsoft, eBay, and Google don't know yet how to do business in China."
International corporations opening divisions in China should give their managers on the ground direct access to chief executives overseas and "break the bureaucratic norms," Gao said. Many U.S. companies put ex-patriots in charge of units created in China, which is "a real mistake" because companies can better tune into local culture by using Chinese talent, said McAfee computer security firm chief executive David DeWalt.
Executives at the HYSTA gathering believe Chinese companies will inevitably outgrow their borders and launch international operations, facing their own challenges regarding adapting to local cultures abroad.
"It is difficult for people who live around here to deal with Chinese entrepreneurs. Also, it is difficult for Chinese entrepreneurs who go abroad to deal with other people, " said panelist Weiying Zhjang, dean of Beijing University's Guanghua School of Management.
Yahoo! co-founder Jerry Yang described the HYSTA gathering as a rare opportunity for entrepreneurs in world renowned Silicon Valley to better understand China's promise and potential. "In China, if they can harness that entrepreneurial spirit, energy and creativity with capital systems, legal systems and protection of intellectual properties generated there, China is going to be an incredible place for innovation."
Copyright Agence France-Presse, 2007