New research from TMCD examines how China’s most successful multi-national enterprises (MNEs) have used their experiences in Europe to give them a competitive advantage.

The TMCD researchers carried out in-depth studies of two leading Chinese telecom companies: Huawei and ZTE.

The study found three key ways in which Huawei and ZTE learned important lessons from their European expansion:

• Learning lessons from customers, including how best to communicate with customers in order to understand their needs and demands, how to create value for customers by producing products that appeal to different customer segments, how to develop productive long-term relationships with customers, and how to control and manage intangible assets like brand and reputation.
• Learning lessons from cooperation with local companies, for example by undertaking joint ventures in R&D, or developing collaborative branding or marketing initiatives.
• Learning lessons from the conditions in host economies, for example the importance of respecting local business culture, complying with local regulatory frameworks, and of participating in corporate social responsibility activity.

Some examples of the lessons that Chinese companies have learned from expanding into Europe are:

• Knowledge management and the importance of having standardised document-filing protocols in order to facilitate rapid and widespread disseminate of knowledge across the organisation.
• How a technological solution developed to address a problem in one market can be re-purposed for different uses in other markets.
• How understanding customer preferences, by collecting and analysing sales data or undertaking research into customer preferences, can inform the development of desirable consumer products.

The research concludes that Europe’s ‘superior investment environment, high technology, and advanced management methods’ have made it a hot-house in which Chinese MNEs have been able to develop the means to transfer knowledge throughout the organisation and integrate it into their business operations.

A paper regarding this study will be published soon. You can find details of how to access it in our next newsletter.