Breaking Barriers: How Chinese Companies Overcome Challenges When Going Global

Ishay Givon

October 2 , 2023 · 5 min

The need for localization runs deep, often becoming relevant when you least expect it. Even the process of globalization itself takes on local flavors and is shaped by a company’s home culture. Over the last 20 years, and particularly in the last decade, more and more Chinese companies have been going global and expanding businesses, seeking success outside their own expansive borders. However, this global expansion hasn’t come without its challenges. Some of these challenges that they face are universal, faced by expanding companies everywhere. Others are unique to China.

Do Chinese Companies Face Challenges in Global Expansion?

Chinese companies often encounter unique challenges when attempting to expand globally. One primary issue is cultural differences. Adapting products and strategies to resonate with diverse international audiences can be a daunting task. Additionally, concerns about transparency, intellectual property rights, and regulatory compliance can create hurdles. Geopolitical tensions and trade disputes can further complicate global expansion efforts.

Establishing trust and credibility in foreign markets can take time and effort. Nevertheless, with careful planning, cultural sensitivity, global mobility, and a commitment to compliance, Chinese companies can overcome these obstacles and successfully expand their global footprint, as seen with the emergence of global dominance in international relations of several prominent Chinese brands in recent years.

5 Local Challenges of Going Global

With nearly 1.4 billion people, China is a big market all on its own. For a long time, Chinese companies could be happy with the revenues earned without crossing any borders. But economic and cultural shifts over the past two decades have pushed Chinese and overseas businesses to think bigger. Regulations have been updated, culture has changed, and the global community has grown stronger than ever.

Chinese companies from a wide variety of industries are expanding internationally, with tech and gaming leading the way. As companies take the leap into overseas expansion, they need to deal with a few common hurdles:

1. Post-Merger & acquisition Localization

Expanding beyond China’s vast domestic and international market, has become a strategic imperative for many Chinese companies, particularly in the tech and gaming sectors. However, this international expansion often presents a multitude of challenges, with one prominent obstacle being post-merger and acquisition (M&A) localization.

When Chinese firms acquire or merge with foreign companies, ensuring a smooth integration with global multinationals while respecting local cultures, regulations, and market dynamics can be intricate. Effective localization strategies are vital to harmonizing operations and optimizing the value of these global investments. Overcoming this challenge is essential for Chinese businesses aiming to thrive in the global arena.

2. Legal and regulatory localization

In some areas of the world, driving three hours in any direction will get you to four different countries, each with a housing market and its own rules and regulations. In these places, like Europe, international companies are accustomed to dealing with other countries’ legal requirements. But if you’re a Chinese company that has been satisfied with your own 9.59 million km2 stomping ground until now, dealing with foreign enterprises and with new legal systems can take some adjusting.

You’ll need to find experts who can navigate in the local language and likely will need to tweak your product, your security and privacy measures, and even your production process to fit with the expectations and laws of new markets.

3. Localized pricing

One of the most important elements of localization for industrial companies is adapting pricing for local and international markets. While this has a major economic element, it’s also affected by culture. For example, BLEND’s Chinese Business Development Manager, Ann Chen, likes to give the example of a Chinese bicycle manufacturer who set the price of their products to compete in the local market. Chinese consumers saw a good deal.

“But in Germany, the same price sent a very different message to domestic market,” Ann explained. “German customers saw it as suspiciously low and doubted the bike’s quality and safety.”

As Chinese companies move abroad, they not only need to know what the standard prices are in local markets but what signals they send.

4. Building a brand

Every business community around the world runs on slightly different norms. Ann points out a stark difference in Chinese and international business school culture:

“It may come as a surprise to people accustomed to Western cultures, but the concept of a brand just isn’t as strong in China. Consumers don’t look for it and companies don’t even think to develop it.”

The Chinese market isn’t built around branding the way that American and European markets often are. The result is that Chinese companies don’t have the content infrastructure they need to compete in those markets. When they want to invest overseas or to expand they have to start from scratch to build a reputation and brand recognition. Localization audits and fresh, targeted content, help to build that foundation.

5. Translating cultures

Certain industries face additional challenges. Gaming is an important sector in China, and one that is leading the way toward more globalization. As many serious gamers will tell you, a good game needs a good story. Some Chinese game companies have achieved this by digging through Chinese history, literature, and legend.

These games are steeped in Chinese culture and require cultural context to understand. To take these games to new overseas markets, a fluent translator isn’t enough. This challenge demands a localization expert with a native understanding of both Chinese cultural nuance and the target market to help local gamers fully experience the in-game world.

How Can BLEND help Chinese companies overcome challenges when going global?

BLEND can help break through these expansion barriers with localization services that cover everything from pricing and technological compatibility to intercultural communications. For Xiaomi, one of BLEND’s largest Chinese clients, this broad perspective is vital. Xiaomi, and other Chinese tech companies, need teams that can translate to multiple languages quickly while taking into account precise technical translation details and cultural nuance.

Read our latest case study to learn more about how BLEND supported Xiaomi’s global expansion and how we can help you put down roots all over the world.

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