Teething Troubles

China Wrestles with Foreign Rules

China discovers the pains of globalization.
  • Why it matters

    Why it matters

    China is discovering how hard it is to enter foreign markets. These lessons in globalization are levelling the playing field between China and the West and having positive knock-on effects back home.

  • Facts


    • Beijing’s export of high-speed trains to Mexico shows that Chinese companies are serious about becoming major players in foreign markets.
    • The China National Offshore Oil Corporation’s attempt to buy U.S. firm Unocal failed largely because the Chinese didn’t understand U.S. lobby politics.
    • At recent economic talks, Chinese executives complained about German friendliness and the country’s visa process, business culture and free press.
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Chinese company bosses are suffering from a symptom that is making them increasingly nervous these days: normality. At least that is what their competitors in the West would call it.

Companies in Europe and America have long faced challenges such as rising wages, patent constraints and lagging sales in domestic markets. For China’s industry, however, such things are a new experience. Now, its companies are confronted with another new phenomenon: the stumbling blocks of globalization.

The pressure to go out into the world is immense. Fierce competition exists in many sectors at home, like the automobile industry, for example. Businesses are discovering that competitiveness, especially abroad, can and must be learned.

Now China’s industries are experiencing globalization in what, for them, is the opposite direction. The most recent deal on the export of high-speed trains to Mexico shows Chinese companies are actually serious about it.

Chinese companies are finding out what it might have felt like for Western companies in the past decades. The step abroad is something other than just exporting goods. Bureaucracy, protectionism, foreign customs and different cultures confound Chinese executives, exactly as they had confounded the companies from the Swabia region in southwestern Germany during their first forays into China.

This new reality surfaced recently during German-Chinese economic talks. Chinese executives complained about not always feeling welcome in Germany. Its visa process was laborious for a start. In Germany, one needed permission and evidence for everything and the existence of a free press was particularly bad, as it allows everything to be called into question and unsettles the public.

After their first small steps on foreign soil, many Chinese executives say they struggle with the complexities abroad. The attempt by the China National Offshore Oil Corporation (CNOOC) to purchase the U.S. firm Unocal failed, if nothing else because the Chinese couldn’t find their way through the confusions of U.S. lobby politics. The takeover of the energy producer Nexen last year, is suffering today because of the promise CNOOC made to the Canadian government that the Chinese wouldn’t radically restructure Nexen immediately.

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