China Inc's global growing pains

Thu Jan 21, 2010 11:17am EST
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By Alan Wheatley, China Economics Editor

BEIJING (Reuters) - It was a proper dressing-down for the boss from deepest China who had travelled to the capital to seek government help with overseas expansion.

Vice-Premier Wang Qishan publicly interrogated the head of Sany Heavy Industry Ltd Co, a big engineering firm, about his management capabilities, asking if he was sensitive to cultural differences and the difficulty of dealing with unionized labor in the west.

"If the other side's engineers resign, are you really going to send people from Changsha overseas, and make the whole company speak Hunanese?" he asked, referring to the dialect spoken in Hunan, a province of nearly 70 million people whose capital is Changsha.

The gulf that so exercised Wang -- in a scene played out in public last year during the annual session of parliament -- has since been on full display in a cultural and political skirmish between the Chinese government and U.S. internet search engine Google.

That row, over censorship in China, will hardly make western politicians and consumers feel more kindly about China or its corporations as potential suitors. China's ambitions, and how they might be affected by the Google controversy, are likely to be a hot topic at next week's annual meeting of the World Economic Forum in Davos and beyond.

How readily such differences in values are bridged could have an important bearing on whether Chinese companies can graduate from being mere low-cost manufacturers to secure a role on the world stage commensurate with the country's growing economic clout.

China has seemingly effortlessly amassed the world's biggest stockpile of foreign exchange reserves, it is overtaking Germany as the biggest exporting nation and now has a car market bigger than America's. Now comes the hard part.

Chinese companies are snapping up natural resources firms across the globe and picking over the carcasses of car marques laid low by the financial crisis. The value of Chinese outbound M&A, at $42.6 billion last year, was below a record $73 billion from 2008, but nonetheless accounted for China's highest share yet of the global total at 7.5 percent, Thomson Reuters data show.   Continued...

<p>A labourer works inside a workshop of a textile mill in Huaibei, east China's Anhui province in this November 4, 2006 file photo. REUTERS/China Daily/Files</p>