Chinese Business Sets Sights on Europe
China's shareholders and CEOs are growing restless. Keen to expand faster and further than even the phenomenally successful local market allows, they are setting their sights on Europe. The continent offers strong infrastructure, relatively stable politics and opportunities to buy cutting edge technology, well known brands and ready distribution channels for China's cheap goods.
But it would help if Europeans weren't so complicated.
Such was the consensus at a meeting this week of 250 European and Chinese business leaders in the lakeside setting of Geneva.
Whereas not long ago Western companies had to undergo culture shock, management training and plenty of consulting in order to do business in China, the tables are beginning to turn as China's industrialists and financial institutions see in Europe a source of old world prestige and quality.
In 2004, China invested some US$40 billion (euro31 billion) abroad, according to the U.N. Conference on Trade and Development. But high labor costs, troublesome unions, centuries of tradition and miles of red tape are proving formidable obstacles.
"Whenever we go into a new environment, we need to get used to the situation. Many Chinese companies coming to Europe aren't even aware of the local laws," said Ren Hongbin, president of China National Machinery Industry Corp.
"Chinese companies have a long way to go when it comes to investing in Europe, particularly managers," Ren said.
According to Philippe Meyer of the Geneva Chamber of Commerce, China Inc. needs to take care not to make the same mistakes many Japanese companies made in the 1980s chiefly a failure to understand local conditions properly and poor communication with non Japanese staff.
Television and cell phone maker TCL Corp. is one Chinese company that has experienced widely publicized difficulties in its European dealings. Last May, it bought out French communications company Alcatel SA's 45 percent stake in a handset joint venture after heavy losses partly blamed on high labor related costs in Europe.
By contrast, when Hong Kong's Johnson Electric Trading Ltd. purchased Saia Burgess Electronics Holding AG for 700 million Swiss francs last year, it was seen as a white knight saving the Murten, Switzerland, based electronic products company from a far lower bid by Sumida Corp. of Japan.
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