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Tao Shiquan: Chinese Enterprises Need Global Thinking Before Going Overseas

Oct. 31, 2018

According to a recent gazette published by the Ministry of Commerce, National Bureau of Statistics and State Administration of Foreign Exchange, China’s direct investment overseas had reached 1.8 trillion dollars by the end of 2017, ranking No. 2 in the world. This is a marvelous achievement. However, we must also be aware that those Chinese enterprises that have gone overseas are seldom truly localized for international operation, that is, few have settled down and struck roots overseas.

During a recent business trip to the United Arab Emirates, a local government official who was in charge of investment promotion asked me an interesting question, and I thought a lot over it. When we were dining in Abu Dhabi, he pointed at the high rises outside the window and said: “Chinese enterprises have undertaken the construction of many landmark projects, some even in EPC (Engineering Procurement Construction), in Abu Dhabi and Dubai. However, they still prefer turnkey projects in recent years when we have substantially lifted restrictions on investment. Why don’t they, after completing the projects, partner with local owners for long-term operation, which is more lucrative?” The question was for construction projects, but our liquor industry and the food industry as well have both to answer it.

   

As consumption of public funds in China is now subject to strict control and the economy is upgrading, leading distilleries have put more efforts into their internationalization. However, according to authentic statistics, Chinese liquors account for less than 1% in the world market, while Mexico, which is much smaller than China in terms of economic volume, takes over 2% of the international liquor market, and it sells its tequila basically on the high-end market. Why this difference? While we aim at international operation, our mind remains in international trade. Our enterprises are physically overseas, but the mentality is not.

Products are the basis of all marketing activities, and the Chinese liquors are not international yet in flavor. As more and more consumers were born in the 80s and 90s, the world liquors market today evolves toward more palate-friendly, youthful and international flavors, and low-alcohol and mixed drinks are popular. However, few cocktails, as of now, are made with Chinese liquors. According to my experience with foreign distilleries, at least the Chinese light-aroma liquors are a very good base for cocktails and are sure to have a market in the world.

And the Chinese enterprises have left unattended a lot of basic works in brand publicity. Wikipedia, the “first window” through which foreign consumers learn about a brand, is an excellent marketing platform on the Internet, and it’s free. However, most Chinese enterprises take no heed of it, and even fewer update their information there from time to time. That’s surely not the right way to catch people’s attention. As a matter of fact, the Chinese enterprises’ presence on Wikipedia, YouTube, Flickr and other popular social media remains very weak and their recognition is basically non-existent.

Meanwhile, Chinese enterprises are keen on superficial shows in offline marketing, and leading distilleries going overseas love to host grand promotional activities in landmark cultural buildings, gathering ceremonious usherettes, mainstream media, local government officials, cultural celebrities and senior Chinese diplomats in the localities. They are important, but, so far as localization is concerned, we need more to have local opinion leaders impressed, and in a more persuasive way.

A long-term perspective reflects a confidence in the product, which is based on cultural confidence. Kung Fu movies, terra cotta warriors, silks, ceramics, Peking Opera and Confucianism are all cultural symbols that the world knows about China and the Chinese enterprises can resort to when they go overseas. In South Korea, the stories from The Romance of the Three Kingdoms are known to everyone, and we made use of this theme to sponsor activities in a Seoul bar and the outcome was surprisingly satisfactory.

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