Home World CHINA Thirteen Reasons Why Chinese Companies So Often Fail Outside China

Thirteen Reasons Why Chinese Companies So Often Fail Outside China


Way back in 2010, I wrote Ten Reasons Chinese Companies Fail In The U.S. for Forbes Magazine. Then in 2015, I did a blog post on the same topic, entitled Top Ten Reasons Chinese Companies Fail in America

My top ten list in that article was as follows:

1. Chinese companies focus on a Chinese consumer, not an American one.

2. Chinese companies fail to realize how one reputation-damaging mistake in the United States could doom them forever here.

3. Chinese companies fail to realize it will take time for them to make an impact in the United States and they are unwilling to spend the time and money necessary to do so.

4. Chinese companies focus too much on the end result (making money), and by doing so, they sacrifice the professionalism that would allow them to achieve long- term success.

5. Chinese companies tell users what they think they want to hear instead of listening to users.

6. Chinese companies focus too much on making money in the short term, rather than on building the quality necessary to sustain themselves in the long term.

7. Chinese companies fail to understand how beauty and design might distinguish their product from that of their competitors.

8. Chinese companies rely too much on phone calls and face-to-face meetings instead of e-mail.

9. Chinese companies fail to use “simple and elegant designs.”

10. Chinese companies fail to realize their need to hire MBAs and those with local knowledge.

Subsequent to the first posts, I received an email from a reader explaining why he liked our list so much and then proceeding to list out exactly how so many of the above things apply to the Chinese company for which he works. The below is the email, doctored to avoid his company ever being able to recognize him.

I’ve never felt compelled to email a blogger privately but your article was SO spot-on I simply had to reach out to you. Let me first introduce myself.

I am in a high level marketing related position for a Chinese company with a U.S. office. I have decades of high level marketing experience, some with Fortune 500 companies. I am proud of my experience and my contributions. This Chinese company presumably hired me because of my experience and my past accomplishments.

I took my current position to enhance the sales side of this Chinese company. In my first year at the company I quadrupled the sales of one division. Despite this I’m constantly being told that sales in this division should be considerably higher and they consistently forecast those higher sales even though we don’t have the product in our warehouses to accomplish that. The high level Chinese executives at the company simply do not understand the concept of “American end users aren’t going to wait six months for their product for the boat to come from China.” How can any CEO project such a forecast without the inventory? It makes no sense and I reiterate this to management till I’m blue in the face.

When it became clear that I was instrumental in increasing sales by leaps and bounds, it was deemed “luck” by the Chinese execs, including the CEO. My morale is, well, virtually non-existent.

All the points in your article I have fought about ad nauseam. I don’t believe I’ve ever felt so frustrated at any job. The lack of designated responsibilities and titles to employees, the built-in cultural (and bluntly hinted at) expectations of working over 40 hours a week, “Chinese style,” a not-so-subtle reference to Americans being “lazy,” and furtive “Chinese meetings” are all aspects of working for Chinese employers that leave us American workers less than motivated.

I know that my situation is hardly an isolated one. I have a European friend who got fired at his large Chinese company for trying to update the customer service policy to be more friendly to buyers (they misrepresented their products and did not grant refunds) and another who was terminated after taking a stand against a fake product they were selling  as real. There is a bizarre mindset among many in the Chinese business community here that US law is irrelevant, or just an inconvenience.

Your point about the Chinese coming here thinking the US market is like the Chinese market hit home with me. Chinese tastes are quite different from American – we like different colors of products, for example. When I continually point this out, it falls upon deaf ears. We lose our shirts rolling out a product, I utter “I told you so” under my breath, and continue to beat my head against a wall.

I’ll bring up salient points and provide marketing direction and he’ll ask me a question that makes me want to pull my hair out, strand by strand. #1 and #5 go hand-in-hand, as I’ve also brought up the “Shouldn’t we be telling China what to make, instead of China sending us product we can’t sell?” question. Recently, the CEO asked the same question, as if it were an original thought, of course.

I also agree with you on how Chinese companies tend to devalue “soft” competencies such as marketing, despite a solid marketing strategy being pivotal to business success. At one point early on with the company, I unveiled my thoughts on forming the company’s future marketing strategy. After my sales team added its contributions, the CEO appeared dismissive of the proceedings, as if a couple of know-nothing Yanks were telling him how to run his business.

Well, we were. We’re in it for the long term. We want to build a good brand with a good reputation. Most importantly, we are the ones with knowledge of the American market and presumably that is why we were hired and that is exactly what we were supposedly tasked to do.

By the way, Point #1 made me laugh out loud, because it reminded me of conversations I’ve had with the CEO.

The below are typical conversations my firm’s lawyers have had with Chinese clients:

Chinese client: How much should we pay for that U.S. trademark?

Lawyer: I have absolutely no idea. I just do not know your industry well enough to be able to help you at all on this. But, we have worked with a company that does nothing but value IP and I would be happy to give you their name.

Chinese client: But what is your best estimate?

*     *     *     *

Chinese client: Should we start out selling our product just on the West Coast or should we start out nationally?

Me: Good question. Difficult question. It seems to me the answer to this will hinge greatly on the costs involved and on your ability to set up distribution networks. My firm does not handle questions like this (and even if we did, I do not think it would make sense for you to pay law firm rates for this information) but I would be happy to refer you to top notch business consultants who do.

Chinese client: Should we start out in Los Angeles, Chicago or New York?

I am though reviving and expanding this list now because I recently received an email from yet another person working for a Chinese company in the United States, and this person listed some more reasons why Chinese companies tend to do so poorly in the West.

I came across your article because I am searching for ways to tell my Chinese CEO that our current method of doing business in the US is not working and I found great solace in your article.

I have a few more points I would like to add to your list and just wondering if you could repost the article so that it has a recent date so I can send it to my CEO? (haha, kidding . . . .kinda).

Here’s my continuation to your list, all based on my own personal experiences and what I have learned this past year and a half:

11. Chinese companies believe personal relationships — guanxi — work the same in the US as in China.

For example, in China if you purchase a semi-expensive gift (a $500 Gucci scarf) and give it to the operations manager of an enterprise you want to become your client, the operations manager “owes you one”. The gifting culture in China in business situations is like buying your way to the top. So once the operations manager accepts the gift, they will be obligated to return the favor by going out of their way to do something for you or by giving you insider information about their company that you are not supposed to know. In the United States, it does not matter what you give the operations manager, they are not going to be “culturally indebted” to you and not everyone cares about luxury branded gifts.

12. Chinese companies believe your job title and company role depends on who you are talking to and they can be (and are) “changed” depending on the day or week, without realizing how the lack of consistency comes across as unprofessional.

Sometimes I’m the Lead Account Manager, sometimes I’m the Lead Sales Representative, sometimes I’m the VP of Corporate Partnerships, sometimes I’m the Operations Manager, sometimes I’m the CMO. Who knows what I’ll be tomorrow? The reason: there is no team, there is just one person filling all the roles.

13. Chinese companies believe that entering the United States through by cold calling or cold emailing and sending the equivalent of a Dissertation on your products in a PowerPoint to a stranger will inform them enough about your products for them to contact you about buying them, but the reality is that most people in the United States don’t read content that long and can and will simply google search your company and products if they are interested.

Since the United States has relatively easy searchable sites like the BBB and Dun & Bradstreet and Google reviews, it is common here to look up information about a company and its reputation online. And if they find absolutely nothing written about you except that you have one employee in the United States and no enterprise clients listed on your website, things don’t match up. Furthermore, the lack of time and money Chinese companies dedicate to marketing and PR makes them seem fishy. In China, marketing is not as important as there isn’t the same emphasis on reputation and product information isn’t widely available on the internet so sending wordy PowerPoints and product pamphlets is how things are done. Chinese companies tend to focus solely on making money while saving money and they typically, skimp on key steps steps like their online presence, their branding, and having a real U.S. team. These are just some of the reasons why most lack sufficient US customers to succeed here.

I’m stuck as the only person running the US operations of ________ and my CEO won’t listen to advice on what it really takes to succeed in the United States.

What are you seeing out there? No really, what are you seeing out there in terms of Chinese companies figuring out how to make it in America? I would love to hear from what people are seeing and hearing out in the field.



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