A decade ago, hardly anyone outside of China could name a Chinese company. Today, Chinese businesses like Baidu, Alibaba and Tencent are among the most valuable in the world. “China Inc” has been expanding operations and investment abroad at a quickening pace, impacting the lives of people in cities where they operate.
Yet, despite their expanding presence in the world, there are few scientific and in-depth studies of perceptions of Chinese companies around the world. How familiar are people with Chinese businesses? Do consumers in western countries welcome the presence of Chinese companies? What do neighbouring Asian countries think about the Chinese investment spree?
Brunswick’s “New Perceptions of China Going Global” provides answers to many of these questions. As part of the study, members of the general population of 18 countries where Chinese firms have significant investments and ambitions for growth were surveyed, capturing public perceptions of Chinese investment in countries including Germany, the United Kingdom, the United States, India and South Africa.
In addition, the report interviewed 300 Chinese business leaders whose companies have either already expanded internationally or plan to do so soon. We asked them about topics such as their global ambitions, the U.S.-China relationship and Brexit.
The results are both surprising and, at times, alarming.
The study shows Chinese firms have great opportunity for international investment because of the generally positive views of Chinese companies and the growing recognition of the innovative force they are becoming. However, Chinese companies also have to improve how they explain to the world who they are, how they operate, and their commercial goals in order to build greater trust and credibility.
Here are some interesting findings from the report:
“Brand China” is strong but poses risks
Chinese companies have a positive image globally, despite the high-profile trade disputes. Three-quarters (74%) of members of the global public have a positive opinion of Chinese companies, and one-third (32%) say their opinion is “very positive.” Global audiences tend to see Chinese companies through the lens of how they see China, which risks opinions being formed about a company based on factors out of its control.
U.S. alone in trade concerns; U.K. expects Brexit to strengthen trade relationship:
Nearly three in four (71%) of the global public say their country has a fair trading relationship with China. The U.S. is the only outlier, with perceptions evenly split. Yet Chinese business leaders are optimistic that trade relations with the U.S. will improve – four in five (80%) expect relations to improve over the next 12 months. In the U.K., more than half (54%) of adults expect the U.K.-China trade relationship to strengthen as a result of Brexit, while 29% expect Brexit to not make an impact, and only 18% expect a weakening of their bilateral relationship.
Nuanced views along the Belt and Road, and in the West
While global views of Chinese businesses are positive, outbound companies must be sensitive to nuanced regional views that carry unique reputational challenges. “Brand China” is strongest along the Maritime Silk Road, while Western nations (U.S., Europe) are more sceptical, with perceptions in nations along the overland routes of the Belt and Road falling in between these two poles. South Asian nations and the Middle East report “very favourable” views toward Chinese firms at a much higher rate than in the U.S. and European nations.
A global story, told by others
Many Chinese companies are well under way in building a global business. Two-thirds (67%) of the global public have heard “some” or “a lot” about Chinese companies in the past year. However, only 12% have seen information directly from Chinese companies. Instead, other voices are telling their story for them. Media reports, social media commentary, and word of mouth are the leading sources about Chinese companies globally.
Say what you do, and what you stand for
For a Chinese company to deepen support and trust, it needs to communicate its vision, values and core beliefs to external audiences. Greater access to information creates deeper trust. Respondents who have seen “none” or only “a little” about Chinese companies over the past year have substantially less support and trust compared to those who have received “a lot” of information – among whom four in five (83%) are favourable towards Chinese companies.
More engagement needed to solidify trust
Earning and maintaining the trust of local communities is critical to successful global expansion. Around two-thirds of both the global public (65%) and Chinese business leaders (63%) believe it is important for a Chinese company to be trusted where it operates locally. Trust seems to be forthcoming for the present, with 74% worldwide trusting these firms. But it is also fragile, with a perceived underperformance in environmental protection, employee treatment, transparency and ethical conduct.
Our research points to several concrete actions Chinese businesses can take to enhance their positions abroad. A failure to act on stakeholder engagement and communications can deepen distrust and create political and reputational risks that can damage a company’s social license to operate.
Ensuring greater understanding of Chinese businesses among international audiences is key to creating more positive perceptions, and that cannot be done without more and better communication. Communication demonstrates transparency and plays a critical role in building trust for any company.
Chinese business is not just going global; it has already become global. In this new era of China’s development – marked by disrupted growth models as much as by economic and geopolitical clout – our survey demonstrates a multiplicity of perspectives on and from Chinese companies bringing both challenges and opportunity. It is an era of fresh uncertainty, but one that carries with it great possibility.
David Ashton, Partner, Brunswick Group