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SUMMER DAVOS: Going Global
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The World Economic Forum’s Key Speaker, Professor Wang Gao of the China Europe International Business School, talks to Business Tianjin 

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he integration of Chinese companies into the global economy was one the most prominent themes of the World Economic Forum’s ‘Meeting of New Champions’, which was held in Tianjin last month. Professor Wang Gao is a man with a vast range of experience and expertise in international business. After working as a consultant to the Chinese government, he finished his PhD at Yale University in the US and took a number of prestigious roles within some of the world’s biggest multinational companies- including Coca Cola. As a highly respected associate at the China Europe International Business School (CEIBS), he shares his unique insight with aspiring entrepreneurs and business scholars. Before delivering his speech at the 2012 Summer Davos, Professor Wang gave us his thoughts on the current state of the Chinese and global business environments.
 
The central focus of you speech was Chinese companies ‘going global’. How can Chinese companies integrate themselves into the global market more effectively?
Chinese companies are already competing on the global stage and have been for some time. When we talk about ‘going global’ we don’t just mean selling goods and services in other countries, we also point out that Chinese companies should assess business opportunities on a global level and compete with major multinational players in all markets- including here in China. ‘Going Global’ for Chinese firms is a mindset and a framework. Firms should take the globe as a target market for their goods and services, then think about how you would choose which ‘segment’ to aim for. There are different methods and ways to evaluate this, but if you consider the basic aspects; costs, logistics, consumer base, R & D and all of the other aspects, you start to see a clear picture of which country is more attractive. 
 
Now, for most companies here, the country that will come out as being the best option will be China! You don’t need to go abroad- despite the current trend. If it makes more sense, compared to everywhere else in the world, to focus your resources and time into China first, then that is a rational choice. If you have enough resources for a second country, you then need to follow the global market mindset to decide which destination is the next best choice. ‘Going global’ means systematically evaluating every market on the planet in this way. 
 
What challenges do Chinese firms, specifically, face with regards to the ‘going global’ mindset and to competing with foreign companies?
Chinese companies have several challenges. I think the most significant difficulties are finding the talent, building the brand and having patience. Getting the right people, both locals and internationals, into your team is difficult for a Chinese company due to the amount of competition to entice the most talented people to work for them. Additionally, domestic firms are competing to establish a dominant brand. In the past, the big international brands would only target the higher section of Chinese society who had more spending power. This created a space for Chinese brands to target those with less income. But now, as the Chinese consumer has more disposable income, domestic brands such as Li Ning are competing with Nike, Adidas and the other multinationals for consumer segments in China.
 
When it comes to building a global company, I always say that patience is incredibly important. You need to gradually learn how to work with foreign parties, learn the rules of the game elsewhere and take some time to get to know the consumers there. If you look at the Japanese automotive companies, Sumsung, Nike and all of these big names, it took them a long time to achieve the global success that they enjoy today. Chinese companies now have to be patient, do their homework and make progress over a period of time.
 
It is often said that the Chinese business sector suffers from a distinct of ‘lack of talent’. Do you think that is a fair comment?
The talented Chinese business people are already there, although demand is still outweighing supply. When you look at multinational companies, most of them now have Chinese people working as senior management. Of course, many of them are educated in the West and there is still more that we can do in this regard at home. However, the skill set and level of expertise amongst the Chinese business community has grown significantly in the last 10 years and it is continuing to improve. So the talent is increasingly out there, but the trick is to find it. If the multinationals are hiring the best Chinese business leaders it is difficult for Chinese companies to entice them. That is the real problem at the moment.
 
altAccording to the World Bank’s Best places to do business survey, China’s reputation as a business friendly environment is trailing behind that of many other Asian nations. Do you think China needs to drastically improve and rethink its approach in this regard?
Of course we can do more but actually, I think we have done a lot in recent years to make China more open for business and to make it easier for multinational firms to operate here. In terms of regulations, in fact, China is not so bad compared to many parts of the world. The government and local authorities know what they are doing and they care about making improvements. So the policies are good. However, in terms of implementation, things can sometimes be slower.
 
Also, in the past, investors and multinational companies have received a great deal of favourable terms- especially in terms of land and taxes. This has often been at the expense of domestic companies. Recently some of the favourable conditions have been limited in order to make things fairer for everyone. Obviously some multinational companies are not so happy about this and whether you agree with these decisions or not, you have to acknowledge that it is a difficult balancing act. 
 
What do you think are the main challenges for educators, such as the CEIBS, in educating Chinese students in business?
Business education is relatively new to China. In the earlier stages we borrowed the knowledge from western businesses and textbooks. Still now western management philosophies are dominant in the academic sector and we still assign these kinds of books to our students. But now, in my opinion, it is time for us to try to focus on and encourage the development of a Chinese style of business management. We need to encourage students to bring China-based knowledge to business education. As a country we now have 15-20 years of experience to draw upon. 
 
It is important to move with the times and luckily, at CEIBS, we are doing just that. Around the time we opened, in 1984, most of our faculty members were foreigners, and the school was just like a western business school offering programs in China. Now, we have more and more Chinese faculty members joining us, but they were educated in the West. Now more and more research and business expertise is coming directly from China and it is being applied in the classroom. The students appreciate the China-based knowledge.
 
What can Chinese entrepreneurs offer that their counterparts elsewhere in the world cannot? 
I think Chinese business people offer a unique skill set and approach to doing business. If you look at the ways in which Chinese companies delegate roles, you will generally find that responsibilities are not very clearly defined and furthermore, employees generally have less resources with which to complete the task before they start it. Because of this, managers in Chinese companies tend to become more general in their responsibilities. They have to be open-minded, have a wide focus and be versatile within their job. Comparatively, western companies tend to be much more orientated towards departments and having clearly defined roles for people within the company. They also usually determine their goals by looking at what can be done with the resources they already have. So in these companies, workers become more specialised and proficient within their field, which is good, but the Chinese manager may have a broader set of skills, be more resourceful and set more ambitious goals.
 
Finally, can you tell us about some exciting projects the CEIBS will be involved in over the near future?
We just launched the part time financial MBA this year. So far, there have been a very large number of applicants and we are considering running one more class next year. We are always attracting individuals from the financial sector- banks, insurance firms etc. It is great for us. We have a lot of very promising, young mid-level managers who are looking to progress and develop their skill sets. We are just about to launch the International Globalisation Centre for Chinese companies. Our aim there is to bridge the gap between academic and practical research. We are inviting sponsors from a broad section of the business sector and so far it is going very well.
 

By  Josh Cooper
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