Challenging task

"The general perception in Western markets is that Chinese companies are predatory, would trigger job losses and are more interested in growing market share. Such perceptions create more problems for us," says Xiang Wenbo, a director of Sany Group.

Xiang says the company faced such a situation during its recent takeover of Putzmeister, when some workers in Germany decided to strike to protest the deal.

"Our globalization strategy was conducted in an open and inclusive manner. Lack of understanding is what leads to such types of resistance," says Xiang.

Following its Putzmeister acquisition, Sany has so far not posted any Chinese employees in Germany nor taken up any major positions. "We want to leave the company as it was and to maintain its German identity," he says.

But sometimes, even the best of intentions can backfire, especially if the move does not have the backing of the government.

Sany faced such a situation recently when US President Barack Obama cited national security concerns blocking the wind-farm project of its US associate.

Ralls Corp, an associate company of Sany established in August 2010, had invested in a series of wind power projects in the US in recent years. Obama has ordered Ralls to divest its interests in a wind turbine project in Oregon, the first time since 1990 that a US president has formally blocked a business transaction over security concerns.

Not long ago, a congressional committee also urged US companies to stop doing business with two major Chinese telecom equipment makers, Huawei Technologies and ZTE Corp, because of security concerns.

These actions are despite the fact that the White House-ordered review of security risks did not uncover any evidence against Chinese companies.

Mei Xinyu, a researcher at the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce, says that mutual understanding is important for Chinese companies to succeed on the global stage. "It is more like a marriage instead of just coming and overtaking another party," Mei says.

Building bridges

To enhance cooperation with companies in the developed nations, it is important for private entrepreneurs themselves to make efforts to foster closer relations.

That Chinese companies are doing the needful in this regard was more than visible in July when, under the aegis of the China Entrepreneur Club, 30 Chinese businessmen visited the United Kingdom to foster closer links and learn from their British partners.

The combined revenues of the CEC member companies was about 256 billion euros and the visit included discussions with several important officials like British Prime Minister David Cameron and London Mayor Boris Johnson.

"The team represented the private sector, which creates the most jobs in China," said Liu Chuanzhi, founder of China's largest PC maker Lenovo and chairman of the CEC.

During the trip, the Chinese entrepreneurs visited Goodwood, Cambridge and several companies and institutions including Rolls Royce and Virgin Group, holding in-depth discussions on many issues including the global economy, sustainable development and technological innovation.

This is the third time that the club is organizing such high-level meetings. Earlier, the CEC had led similar delegations to Germany in 2010 and the US in 2011, to learn from the developed nations' business experiences and for possible future alliances, says Cheng Hong, secretary-general of the club.

Cheng says it is important for Chinese companies to further enhance mutual understanding and effective communication with non-governmental organizations.

"To the outside world, rising Chinese companies and their owners are quite mysterious. There exist some prejudices that successful business owners from China are just looking for ways to boost wealth and do not care for social responsibilities. This is a totally wrong mindset, and it is our mission to help eradicate this prejudice," she says.

Wang Chaoyong, president of China Equity Group who joined the trip, said that compared with the UK companies, many Chinese companies are quite young, like teenagers "but with great vitality". "Every company has a dream of becoming influential and time-honored. Definitely there will be some Chinese companies that are recognized and well established worldwide in the future," Wang said.

Integration challenge

Fosun Group Vice-chairman and CEO Liang Xinjun says integrate resources globally is important. Provided to China Daily

Though challenges are aplenty for Chinese companies, many of the younger players often find it difficult to properly integrate resources in the global arena, as they grow in scale.

"In many cases, even if the Chinese companies get all the required approval for the acquisition, they find it difficult to effectively integrate the resources globally. This is a major obstacle for global expansion," says Liang Xinjun, CEO and vice-chairman of Fosun group, one of China's largest privately owned conglomerates.

Liang says that many foreign companies can allocate resources globally in an economical and profitable manner, such as choosing some countries where production costs are quite low as a manufacturing base, and selling products to the most profitable markets.

For most of the Chinese companies the overseas expansion starts with investment in overseas projects, followed by posting of Chinese employees and then repatriating the finished products to China for global sales. This is not exactly what one would call as "going global" or integration, he says.

He says what distinguishes Fosun from other companies is that it not only invests in overseas companies but also brings the foreign brands to China.

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"This automatically raises the company's global brand recognition. Because of our deep understanding and the attraction of domestic market to foreign companies, this model of international cooperation has a higher possibility of success," Liang says.

The philosophy behind such moves is to marry China's growth momentum with the world's resources, he says.

"The European debt crisis has dented market confidence. But it has also provided us with much confidence to invest in overseas markets at reasonable prices," he says, adding that European and US companies that are in innovative fields such as pharmaceuticals research could be possible M&A targets.

In 2010, Fosun acquired a 7.1 percent (now 10 percent) stake, for 44 million euros, in French resort operator Club Mediterranean SA.