Chinese firms seeking to go global must be transparent and build international recognition

As China becomes richer, more mainland firms are expanding overseas and buying foreign assets. Promoting a significant international presence for major Chinese companies is also one of Beijing’s key strategic objectives. Yet, as the nation raises its global business profile, its ambitions are facing obstacles it must overcome to compete internationally.

“Going global”, a new series in the Post, examines the challenges and rewards Chinese companies face in this state-sanctioned strategy. One long-standing problem has been that politicians and regulators in target countries are often cautious, if not suspicious when it comes to major Chinese acquisitions. But Chinese companies have the right to expect to be treated equally and fairly as any other foreign entity, without being seen through tainted glasses. Too often, their motives are questioned. Worse, some are seen as instruments of Beijing’s foreign or military policy.

A notable example has been Huawei, the world’s largest maker of telecommunications gear. It has yet to break into the American market because of mistrust by Washington’s political class over its alleged ties to the Chinese military.

But trust is a two-way street. Chinese companies must show a greater willingness to adhere to international norms and business practices. Too often, when trying make an acquisition or list on a foreign stock exchange, some mainland companies find it hard to jettison their old habit of being financially opaque. Yet, to be credible players on the international stage, a high degree of management and financial transparency is expected.

A related problem is that China has few global brands that command instant public recognition. When a big name like Apple makes an acquisition, it is often welcomed because of its brand recognition. If nothing else, everyone knows the maker of iPhones is sitting on a massive cash pile and has the money to buy anything it wants.

But when an obscure Chinese company makes a mega offer, suspicion is often the first reaction. Such has been the case with Anbang, a fast-expanding but until recently little known mainland insurer. Its failed bid of US$14 billion for Starwood Hotels & Resorts, owner of the W, Westin and Sheraton brands, made financial news headlines but was ultimately beaten by the far-better known Marriott International.

Chinese companies with global ambitions have their work cut out. They have learned cash and credit lines alone are not enough. Reputation, transparency and, yes, salesmanship are equally important, even when you are the buyer.