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Global presence doesn’t make a multinational

Monday,Jan 25, 2016

From: China Daily, 01/25/2016

The world will continue to see more and more Chinese companies internationalizing, experts say.

As Chinese companies ramp up their presence on the international stage with a string of headline-grabbing acquisitions catapulting them to global fame, some experts urge caution: Most still cannot be called true multinationals.

"I think there are a small number of Chinese companies that are already global companies, but it is a very small number, like Lenovo and Huawei," says Stephen Phillips, chief executive of the China-Britain Business Council.

"Some Chinese banks have a very significant international presence as well, but they mostly serve the Chinese customer base, rather than serve the international customer base, so they are only part of the way to becoming truly global in my view."

Despite many state-owned enterprises that have an international presence and private sector companies that are beginning to internationalize quite rapidly, there are very few that are globally recognized.

"But it is changing really quickly, much more quickly than probably any other country," he says.

Phillips says the world will continue to see more and more Chinese companies internationalizing, and they need to do it for at least two reasons: one is to diversify markets and the other is, if they genuinely want to be leaders in that field, they need to be exposed to global competition, whether in services or products, and by going outside the home market and competing with the best of the world.

"If companies mange that in that process, both accessing new markets and moving up the value curve, then they are going to be very successful, but not all of them will succeed. It is not easy, it is very competitive."