Globalization of Chinese Enterprises A Cultural Perspective

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Globalization of Chinese EnterprisesA Cultural
Perspective

• Dr. Warren J. Keegan
• Distinguished Professor of Marketing and
  International Business
• Ronnie Chen, DBA Candidate
• Lubin School of Business, Pace University, New
  York, NY
• December 1, 2006

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Agenda

• Background
• Current Status
• Achievement
• Issues
• Cultural Challenges
• Future Research

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Background

• 1980s Open Door Policy
• 1990s Go Out Policy
• 120 National Teams of State Owned Enterprises
  in Strategic Sectors
• High level of protection
• Special Treatment
• Financial Support
• Management Autonomy
• Profit Retention
• Investment Decisions

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Four Stages of GlobalizationA Countrys Path
Foreign Investor
Importer
Producer
Exporter
2000s

• 1980s

1990s
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Four Stages of GlobalizationA Companys Path
International
Multinational
Global
Transnational
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Motivation of Chinas Outward FDI

• Guarantee Raw Material
• Circumvent trade barriers to exports
• Acquire technology and management expertise

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Chinas Outward FDIBy Geography

• Chinas Outward FDI is in both developing and
  developed economies with concentration in South
  East Asia

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Chinas Outward FDIby Sector

• Trading Services was the initial focus other
  sectors have gained importance

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Chinas Outward FDI

• Chinas Outward FDI is growing but share in the
  world remains small.

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Globalization of Chinese Firms

• Industrial Policy
• 30-50 large SOEs through public offering, MA
• Growth
• 1980s 1990s 13 per annum
• 2000s 7-9 per annum
• 2005 Fortune Global 500
• 15 Chinese Firms

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Globalization of Chinese FirmsChinese Firms on
Fortune Global 500 (2005)
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Issues of Globalization

• State Ownership
• Protected Domestic Environment
• An impoverished economy
• Inconsistent Industrial Policy
• Global Competitiveness
• Branding
• Efficiency
• Innovation

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2005 GDP Per Capita (PPP)

• China was ranked 84 7,204

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2005 Revenue ProfitTop 7 Oil Companies

• Chinese large firms are still further behind
  global giants

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Cultural ChallengeTheoretical Background

• Hofstede (1980)
• Individualism vs. Collectivism
• Power distance
• Uncertainty avoidance
• Career success / Quality of life
• Confucian dynamism

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Cultural Challenge Theoretical Background

• T-HT (1998)
• Universalism vs. Particularism
• Neutral vs. Emotional
• Diffuse vs. Specific
• Achievement vs. ascription

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Cultural Challenge Theoretical Background

• T-HT (1998) Corporate Culture
• Family
• Guided Missile
• Incubator
• Eiffel Tower
• Adler (2002)
• Diversity

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Cultural Challenges of Globalization of Chinese
Firms
National Culture
Culture
Corporate Culture
Cross Cultural Communication
Diversity Management
Ideology
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Implications for Managers

• Management Challenges
• Cultural Awareness
• Cross Cultural Communication
• Multicultural Team Management
• Worldwide Learning

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Future ResearchCultural Impact on Chinas
Outbound Investment

• Ownership structure
• Timing of entry
• Performance
• Size of investment

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• Q A