They should partner local private firms, use their branding and int'l footprint

 

FOREIGN companies wanting to invest in China no longer have the advantage of capital and should actively pursue collaboration with local private enterprises so as to succeed, said chairman of New Hope Group Liu Yonghao.
 

He was speaking at a FutureChina Global Forum session discussing the future of China's private sector yesterday.
 

"In the early days of market liberalisation, foreign companies had the advantage because they brought in the capital. But now, China's own private enterprises are developing rapidly; even small ones may have more than 10 billion renminbi (S$2.04 billion) in sales," Mr Liu said.
 

New Hope Group, which has businesses in agriculture, chemical and resources, real estate and infrastructure, as well as finance and investment, chalked up more than RMB51 billion in sales last year.
 

Mr Liu thinks foreign companies should use their international footprint and branding to collaborate with Chinese firms from the rapidly expanding private sector, said to account for 90 per cent of jobs created earlier this year.
 

Local firms, better placed in terms of their familiarity with local culture, politics and business practices to succeed in China's complex market, are increasingly looking beyond China's shores too and hence could make willing partners, he said. NHG has made investments in Vietnam, the Philippines, Bangladesh and Indonesia.
 

Fellow panellist Wei Ying Chiao, chairman of Taiwan's Ting Hsin International Group, thinks it critical for foreign companies to emphasise efficiency in the short term and scale in the long term.
 

Mr Wei, whose company brought its leading Kang Shifu brand of instant noodles to mainland China in 1992, added: "You need to respect the country, respect every person in this country. If you start with that mindset, then whether in terms of R&D or marketing, you'll have been considering the interests of 1.3 billion people. This will aid success in this huge market."
 

Also on the panel was Fang Fenglei, chairman of private equity firm Hopu Investment Management, in which Temasek Holdings is a major investor. He said that Singapore companies in particular should join government-led delegations of businessmen to gain entry into China's market.
 

Singapore's brand and reputation in China have been boosted by high-profile projects like the Suzhou Industrial Park, Tianjin Eco-City and Guangzhou Knowledge City, he said.

 

Courtesy of The Business Times, 14 July 2010.