Chinese companies abroad: the 国家电网公司 case in Brazil

After a “technical” post last week (focused on resources for language learning “Exam / 考试 https://wodeshudian.wordpress.com/2014/06/29/exam-kao-shi/ #wodeshudian”), this week a short discussion on the business side of China.

I will obviously write more posts on this subject, sharing what I derive from material that I will keep reading- but first, I would like to share a basic consideration, to avoid misunderstandings later on.

When I talk with somebody about the “business side of China”, usually I get two opposite answers: either from those focused on exports from China, or from those talking our companies setting up “branches” (often, shifting production facilities there).

But there is another dimension that I discussed in the past in articles on my blog (http://robertolofaro.com/blog): China foreign direct investment (FDI henceforth) abroad (e.g. on logistics within the Mediterranean Sea, such as the point-to-point between Malta, after Dubai FDI there, and Continental Europe, and expansion e.g. in Naples and other Italian locations).

When I find somebody interested on this subject, again I usually find an existing array of “polarizations”, that reminds me of the early 1990s complaints about Japan: “they are looking for resources”, “exporting their business practices to colonize us”, “transferring their cheap labour practices in even cheaper countries”, etc.

My view starts from another point: if a country sits on a pile of cash issued by another country (acquired largely by turning in the past into the manufacturing sweatshop of richer countries that could turn a blind eye when convenient), eventually it has to use it, before the “issuing” country is tempted to play with the economic equivalent of a match and burn it by undermining its value.

The logic? Use it to reduce dependency from somebody else’s choices- by getting assets able to generate revenue elsewhere.

I do not really care if you agree or disagree: to me, it sounds as a logical choice- that overlaps in its effects with what is usually said by those listed under the “polarization” list that I shared above, but assumes a different, longer-term perspective.

As I was born in Italy and I am now again temporarily resident there, you probably expect that my focus is on Chinese FDI in Italy- but I will start instead elsewhere, and maybe talk about Italy and China (in the past, present, future) in another article, later this summer.

For the time being, I will talk instead about Brazil and China.

Why Brazil?

Well, whenever I visiting for business multiple European countries each week (more than a decade ago), I usually picked up local business magazines and business books, as I like to study business cultures (and, generally, cultures).

This is actually a cheap way to keep being able to “think outside the box” when needed, as sometimes the same issue produces different paths toward a solution, paths “framed” by a specific cultural framework (your own, or that expressed by those you work with/for)- and if you try to see an issue from another perspective, it is not unusual to find solutions that you didn’t consider before.

When I was sent in 2012 in Brazil for some business activities (have a look at my http://www.linkedin.com/in/robertolofaro profile if you are curious), as it was the first time that I had the chance to work there (also if I had had business contacts in Europe with Brazilians in the past), I went shopping for books and magazines both on the way in and on the way out.

I skipped books and magazines in English, and focused on those in Portuguese (via Spanish Latin Italian is understandable).

Actually: I have to thank (again) the US Government, for making available online a “bridging language course in Portuguese for Spanish speakers”, that I obviously used on the long flight from Italy to Brazil via Germany.

So, when I landed, while I wasn’t able (or willing) to speak, I was able to read and listen more than I expected.

One of the magazines I eventually bought was an issue of “Negocios” (http://www.epocanegocios.com.br, April 2012 issue, n. 62), that showed on the cover “Seu proximo chefe sera Chines” (your next boss will be Chinese).

This short post is based on that article (well, at 15 pages, it is more an essay), focusing on just one company, State Grid, specifically on corporate culture differences (the article talks obviously extensively about other issues as well).

In Chinese: 国家电网公司.

While browsing the magazine in the newsstand, what I found interesting wasn’t the expected size of the investments in energy distribution (up to 50bln USD) or the number of kilometers of the Chinese network managed by State Grid in China (enough to go to the Moon and back), but how the company was charting out its integration within the Brazilian energy market.

First, by choosing Brazil as a “testing ground”, to adapt to competition and to a Western business environment, and focusing on a market segment by buying various companies that used to belong to a Spanish group, to accelerate the “cultural learning curve”.

Then, by recruiting a local supplier to complement it HR expansion activities, mixing local and Chinese talent, but adopting an interesting “vendor selection process”.

Yes, articles such as this one smack of PR- but it was nonetheless interesting.

One of the first surprises for the locals was that, aiming for a long-term presence, in order to blend cultures, the business practices adopted were a mix of local and Chinese ones- from remuneration, to working hours.

I could translate and quote various segments from the article (read it- if an English version is not available, but you are interested, I could prepare a “mindmap”), but I think that a couple of quotes deliver some key “cultural differences” elements:
1. “While Western companies are more focused on results, Chinese ones are obsessed by processes”
2. “management meetings are never ending because they have always to produce a consensus; without it, nobody leaves the room… Brazilians think to the Anglo-Saxon model of business, where ‘time is money’. For the Chinese, this is also true. To this end, they invest the time needed to make a decision”

I have other material on business culture differences, covering obviously also the other two “dimensions” that I discussed at the beginning of this post (i.e. export and setting up a branch in China), as well the integration of a Chinese community within the territory (albeit on this point I should refer to a book from Sawyer on the history of China)- maybe later.

There are other, more recent news that remind the State Grid case- recent investments in companies managing critical national infrastructure, e.g. the energy distribution network (oil, gas) in Europe: no matter where you get your oil or gas, you will have eventually to distribute it…

A funny personal element: while I am now working on the “first round” on a B1/B2 Chinese course, I am also “fixing” the A1/A2 version that I recently completed, by rewriting (by hand) dialogues etc. that I had previously typed on my computer (to learn how to write in Chinese using a computer).

My first objective is to read- and writing and reading are useful to that end (I will speak Chinese only when I will have relocated abroad; meanwhile… at most exchanging greetings with Chinese shop-keepers that have material in Chinese within their shop- also if in Italy often they are from a region where Mandarin isn’t the spoken variant).

Well, as I am mainly left-handed, and I write in Chinese from left to right (in other languages, I simply “mirror” while writing, i.e. write from right to left to avoid smearing ink), this morning I went out for a coffee and… not being used anymore to write in the “normal” way, I hadn’t checked my left hand.

So, a couple of my fingers have been… deep blue for most of the morning 😀
Have a nice week!

PS Please read the introduction to understand how to use this website 🙂

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One thought on “Chinese companies abroad: the 国家电网公司 case in Brazil

  1. Zoe Yu says:

    Interesting article. “The next boss is Chinese” : I am not quite sure yet 🙂 China is rich but it requires a lot more than wealth to be a leader.

    Co-incidently I’m left handed too. People said left handers are more intelligent! I’d love this to be true 🙂 Anyway, I write and use chopsticks with my right hands now because my parents forced me to do this when I was young. The argument : It’s being impolite to hold my chopsticks with left hand (considering Chinese traditionally dine on a round table) and write on left hand when somebody uses right hand to write sits next to me.

    My born intelligence may have been downgraded 😦 but I am proud of my parents’ consideration and am maintaining it 🙂 so it’s perfectly balance out.

    Zoe

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