Author Joel Backaler of the recently published China Goes West: Everything You Need to Know About Chinese Companies Going Global tells in the Business Monitor how corporate America can react on Chinese companies coming to them.
The answer to this question varies depending on whether an American firm is considering new ownership, seeking new partners or responding to new competitors from China.
For American companies seeking strategic investment, Chinese ownership presents an alternative to the traditional routes of private equity investment or acquisition by a larger domestic industry incumbent. The identity of the ultimate decision-maker is a top concern among firms taking on private-equity investment. Under private-equity investment, the CEO has to answer to the representative assigned by the private-equity firm. Chinese ownership can remove this concern from the equation.
For American firms partnering with Chinese companies, access to new international markets is an obvious gain. In theory, this sounds like an ideal relationship: The American partner possesses a world-class brand, while the Chinese partner brings capital and new market access. But what are the broader implications for industry standards? Western companies should consider the long-term implications of partnering with Chinese firms, in particular the issues of intellectual property and technology transfer.
Finally, a common misconception about Chinese investment in America is that the corrupt business practices that may be present in the Chinese firm’s domestic operations will simply carry over to the US This assumption is false. When a Chinese company operates in the US, it must do so in accordance with local regulations—or else face the legal consequences.
Are you looking for more speakers at the China Speakers Bureau on China´s outbound investments? Do have a look at this recent list.