Five reasons lists China consultant Joel Backaler in Forbes for Chinese companies to go global. Enough reason to pay attention. After 2013, 2014 promised to be another record year for Chinese companies to enter the worldwide market place.
2013 was another record year for Chinese companies going global. Chinese outward investment reached $85 billion in 2013 – a dramatic increase from $10 billion in 2005. But what happens when China goes West? Specifically, what are the potential benefits and risks of Chinese companies’ expansion into advanced economies like the United States?
An increasing amount of China’s global investment is already going into the US – the size of $14 billion in Chinese investment last year. Chinese firms from a variety of industries including energy, manufacturing, and consumer goods are all finding new markets in advanced economies. It’s time to take a closer look at the five key reasons why Chinese companies go global:…
#4 Acquire Established Brands
Chinese firms also go West to increase their competitiveness by gaining access to globally recognized brands. First, and most importantly, international brands benefit Chinese companies by helping to bridge the “trust gap”. Consumers overseas might wonder: “I have never heard of this Chinese firm, so how can I trust that its products are of good quality or that it will fulfill its obligations as a business partner? Building a brand from scratch can take decades, millions of dollars and savvy public relations. Given their relative youth, many Chinese firms lack the decades of international experience necessary to build globally recognized brands on their own. The next best alternative to follow the path of Pearl River Piano, Bright Food and Wanda and buy another firm’s long-term established brand in the same industry.
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