Wu Guangqiang jw368@163.com EVEN the most imaginative person could hardly predict a decade ago that China would become one of the world’s leading overseas investors, much less that Chinese companies would buy famous foreign companies or brands that were once household names in China. In my youth, foreign goods flooded the Chinese market. Each family took great pride in possessing a Toshiba fridge, a Panasonic TV set, a Mitsubishi air conditioner and a Sanyo washing machine. We had been so accustomed to the common existence of foreign companies and goods in China for so long that we had formed a stereotype that foreign investment was something that only belonged to Western countries. Virtually overnight, however, China has edged itself into the top global investors’ club. While keeping the title of the world’s largest FDI recipient, China is steadily making its way to becoming one of the largest outward investors. Chinese outward investment reached US$103 billion in 2014 — a dramatic increase from US$10 billion in 2005. However, this was only 10 percent of the U.S.’s overseas investment, a third of Germany’s and half of Japan’s. Chinese companies are going global for a variety of reasons, including to enter new markets, to access advanced technologies, to incorporate global management expertise, to acquire established brands and to promote Chinese companies’ competitiveness. Like their Western counterparts, Chinese companies suffered setbacks and failures in their initial attempts to go global. Major instances of failure include China Investment Corp.’s US$1.22 billion loss in the investment in American company Blackstone Group in 2007; Ping An Insurance’s US$1.25 billion loss in the investment in Fortis, one of Europe’s leading insurance companies in 2008; and Shanghai Automotive Industry Corp.’s failed acquisition of South Korean carmaker Ssangyong in 2004. As fast learners of global business know-how, Chinese companies soon learned the ropes of doing business overseas and have since churned out numerous success stories. Among others, Geely’s rejuvenation of the time-honored brand Volvo and Haier’s revitalization of Sanyo’s white goods sector are inspirational examples. Their common recipe for success is to incorporate Chinese wisdom with local conditions while maintaining the essence of the adopted brand. Two years after the acquisition, Volvo began to make a profit. Earlier this year, Volvo launched its most luxurious model in its 88-year history — XC90, an Internet car developed with an investment of US$11 billion. The new hit has been very successful in the European and U.S. markets with more than 30,000 orders from around the world. It will also soon be available in China. In 2012, Haier acquired the white goods sector of Sanyo from Panasonic along with the brand Aqua Sanyo owned. Sanyo’s white goods business had suffered losses for 15 years before the takeover. Two years after the acquisition, however, the division began to make money. What made a dying business revive in just two years? One of the aces in the hole was the thorough reform of Japan’s rigid corporate governance system, including the lifetime employment system. Another key was Ito Yoshiaki, an experienced CEO who once worked for Dell and Sony Pictures Entertainment. It was wise of Haier to hire a Japanese to run the Japanese company. Yoshiaki restructured the company for faster decision-making and policy implementation and accelerated the development of new products that met market demands. A string of new products not only retained Japan’s tradition of fine quality but also introduced China’s revolutionary innovation. For instance, Japanese smart TVs do not have access to the Internet while almost all Chinese smart TVs do. Japanese consumers love Sanyo’s new products such as the palm-sized washing machine “Coton” and a refrigerator with an LCD screen in the door with access to the Internet. Chinese companies have taken the first, yet important, step outward. (The author is an English tutor and freelance writer.) | 