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Chinese Companies Making It In America. When Will That Be?

Posted in China Business

Woke up this morning to the following Facebook post from a good friend of mine:

Reason #1,479,309 why I’m glad that I no longer work for ________  or for any PRC run company for that matter.

Recently closed a deal with [Big Massive Tech Company] and I received the following call last week.

My Friend’s Boss: Hi [Friend].
My Friend: Hi Boss.
My Friend’s Boss: We’re really pumped about [Big Massive Tech Company] being onboard so why don’t you ask your client if she’d be interested in coming to NYC for the All Star game next week.
My Friend: Um, that’s great. I will do that.

[Big Massive Tech Company]: Wow that’s amazing, of course I’d like to go. Oh, can you also send over that contract extension so that I can start processing it. (2 months early).

If I were still at ______ Chinese company:

My Friend: Hey we just signed [Big Massive Tech Company] how about we do something thoughtful for them.
_____ Chinese Company: Great idea. How about you take them to Subway for the Tuesday 6″ inch special and split it with them. Try to find one with a TV then you can watch the All Star game there.  Oh, and watch out for our plummeting stock price.

Moral to this story is don’t waste 1/2 of your professional career working for a PRC company. It’s just not worth it.

And then six or seven other people I know (both Chinese and American) piled on with comments talking about how horrible it had been for them while to work for or do business with a Chinese company.

Then, just a few hours later, I got my daily Newsle email (BTW, if you are not using Newsle, you should be), with an article entitled, Huawei reduces focus on US market.  The article talked of how Huawei would be abandoning the US market because of trade protectionism and “phobia” and because “there were no opportunities for the Chinese telecoms equipment manufacturer in the foreseeable future:

Trade protectionism and phobia pushed Huawei to reduce its focus on the US market earlier this year, which has proven to be a “commercial disappointment” for the Chinese telecoms equipment manufacturer.

According to Scott Sykes, Huawei’s vice president of international media affairs, the decision to move away was not a reflection of the company’s changing commitment to the US market, but of a commercial reality that there were no opportunities for the Chinese telecoms equipment manufacturer in the foreseeable future.

Sykes was commenting on an April announcement by Eric Xu, the company’s executive vice president, who declared Huawei was “not interested” in the US market anymore and had decided to shift its focus to Europe.

Was it protectionism that drove away Huawei or was it poor performance?  I can speak only anecdotally, but I have a friend with a huge company that was “rushed” by Huawei and he told me that his company would never buy Huawei equipment because Huawei had “zero clue of what American companies are seeking in a product and made no real effort to find out.”

More than five years ago, in Top Ten Reasons For China Business Failure — List After List, I set out the following as what I saw as the top ten reasons why Chinese companies do so badly in the United States:

  1. Chinese companies focus on a Chinese consumer, not an American one.
  2. Chinese companies fail to realize that one reputation damaging mistake in the United States could doom them forever here.
  3. Chinese companies fail to realize it will take time for them to make an impact in the United States and they are unwilling to spend the time and money necessary to do so.
  4. Chinese companies focus too much on the end result (making money), and by doing so, they sacrifice the professionalism that would allow them to achieve long term success.
  5. Chinese companies tell users what they want instead of listening to users.
  6. Chinese companies focus too much making money in the short term, rather than on building the quality necessary to sustain themselves in the long term.
  7. Chinese companies fail to understand how beauty and design might distinguish their product from that of their competitors.
  8. Chinese companies rely too much on phone calls and face to face meetings instead of email.
  9. Chinese companies fail to use “simple and elegant designs.”
  10. Chinese companies fail to realize their need to hire MBAs and those with local knowledge.

Has anything changed?  Are Chinese companies better equipped to handle the US market today than they were five years ago?  If so, in what ways? If not, why not?

I don’t know one way or the other on these questions and so I sure would love to hear from you-all on this.

  • BlueApple

    I am not sure whether I understood your facebood dialogue.

    Do you want to say that Chinese companies are niggard? I think the opposite is true, most Chinese companies are very generous when it comes to building customer relations, while many western companies are penny-pinching.

    Chinese companies have a huge local market and naturally it is their first priority to develop their home market (the same is valid for US-companies, in contrast to companies from small European countries).

    However, from a global perspective many Chinese companies are performing well in most parts of the world, including Europe, SE-Asia and Australia.
    Assuming that the requirements of American customers are not so very different from those of other western developed countries, I assume protectionism is at least one important factor when Chinese companies perform poorly in America.

  • https://larrysalibra.com/ Larry Salibra

    As with BlueApple – having trouble following the Facebook conversation. It sounds like the reason the company closed the deal was because it treated the decision maker to a trip to NYC to see the All Star Game. Are you advocating Chinese companies who want to succeed in the USA need more bribery?

    There are big US companies who are both stingy and generous when it comes to budgets for building customer relations – a lot has to do with the internal company culture. I don’t think it is something strongly correlated with national origin.

    Successful Chinese companies in the Chinese market are successful precisely because they’re generous (to the point of extreme corruption) with decision makers.

    • Alex

      Taking a client to a baseball game is certainly not bribery, and bribery, however defined, is many times more common in China than in the US. Having said that I was a bit surprised by this anecdote too given how much Chinese companies in China spend on entertainment.

      On the main topic, all my knowledge of working for Chinese companies is second-hand and US-specific, but two common themes seem to be:

      - little or no insight into the top-level decision-making process, ie. a frustratingly opaque and unpredictable office environment; and

      - unwillingness to spend appropriately based on sound recommendations from US advisors / employees, whether that be on legal or advisory services, hiring people with appropriate experience, advertising and PR, whatever.

      I told a friend who had a horrific experience working for a Chinese-purchased media firm (after six months, everyone had left and the company was out of business) that the first issue was likely cultural and the second can be chalked up to lack of US business experience.

  • Chicago Chink

    Its not going to happen there are no true China MNC’s with maybe the exception if Haier, and few that can stand up to the US business standards that apply. You’ll get Chinese companies in Asia but not succeeding in the US for a very long time. None of those Chinese back door listings or on Nasdaq have worked have they? You can dream on about this one.

  • Sarri

    I don’t know how it is in the US but Huawei is VERY successful in Australia. To the point that almost every dongle sized USB wireless modems available here are made by them.

    From media and general I find Americans are far more anti Chinese than Australians, I suspect Huawei is right and its more due to American sinophobia.