Going overseas has become one of the most concerned topics for Chinese entrepreneurs, and it is inevitable to break the situation by stepping out of the increasingly involuted domestic market and going overseas and to the wider world with the strong production capacity and experience accumulated over the past years.
So, what are the unknown challenges that Chinese companies will face when going overseas? How will overseas markets welcome these Chinese brands and companies? At this point, the experience of those early "pathfinders" is very valuable.
On May 6th, the first live broadcast of the Dark Horse Camp Dialogue Breaker Series, under the chairmanship of Luo Xunyu, CEO of Dark Horse, Peng Jiarong (hereinafter referred to as Chris), founder and CEO of Meixun and an expert on the internationalization of Chinese enterprises, was a guest in the Dark Horse live broadcast room to talk about "The Dilemma and Breakthrough of Chinese Brands Going Overseas".
Arrangement: Jiuyan
Source: iDark Horse (ID: iheima)
Peng Jiarong is a Canadian who has worked and lived in China for more than ten years, and is a rare "Sino-US expert". He was responsible for executive support at Huawei, where he handled many of Huawei's senior executives' overseas communications, and was one of the core team members of Huawei's mission to Canada after the Meng Wanzhou incident. In addition, he is also a public relations expert, pioneered the 5R methodology for overseas market expansion, and has provided international communication services for brands such as TCL, Bloomage Biotech, LONGi Green Energy, Guoxuan Hi-Tech, Dreame, and Segway.
In the live broadcast, the guests conducted in-depth exchanges on topics such as the current situation of Chinese enterprises going overseas and globalization, the stories of overseas cases, the difficulties experienced and coping strategies, as well as the overseas strategies of brands in different industries, the selection of overseas paths, supply chain integration, and localization needs.
Peng Jiarong believes that there are three things that Chinese enterprises must do well in overseas expansion: first, they must be long-term; secondly, it is necessary to localize; Third, we must adhere to the result-oriented.
The following is a transcript of the live broadcast (abridged)
Luo Xunyu: Dark horse friends in the live broadcast room, good evening! Welcome to the "Dark Horse Camp - Dialogue Breaker Series Live Room", and I am very happy to meet you on the first day of construction in this spring-filled May.
Today we are going to discuss one of the topics that everyone is most concerned about in the new module of the dark horse camp to break the game: going to sea to break the game.
We have seen that globalization is no longer the privilege of large enterprises, and "going out of the sea without going to sea" has become the consensus of many small and medium-sized enterprise entrepreneurs. There are also more and more dark horse entrepreneurs who tell us that they hope that through dark horses, they can link to dark horse classmates and overseas resources in different countries and go to a larger overseas market, and they also have a lot of questions to find answers. With these questions, in today's live broadcast room, we invited Mr. Chris Peng Jiarong.
Chris: Thank you, this year marks my 20th year in China. I grew up in Toronto, Canada, and came to China when I was 19 years old. He first studied Chinese language and literature at Zhengzhou University in Henan Province for 4 years. At that time, I was very interested in Chinese history and culture, so I chose to study in the Central Plains, a place with many historical sites along the Yellow River. After graduating, I started my own business, lived in Suzhou for 6 years, and most of the customers at that time were businessmen who came to China from the United States and Canada. Later, I went to Huawei's headquarters and officially became a native of Shenzhen.
I was in charge of the public relations department at Huawei, helping senior executives – including the boss Ren Zhengfei and the three rotating CEOs and the chairman – prepare their media speeches, and I also did an MBA at HKUST.
In the past four years, I came out of Huawei to create the company Meixun, and I am very happy to have in-depth communication with all entrepreneurs, founders and dark horse friends today, and I also hope to bring some valuable dry goods to share my "Shenzhen spirit".
01 Transnational entrepreneurial experience: pay attention to cultural differences
Luo Xunyu: You mentioned Huawei in your introduction, which is a company that we respect very much. Many of our entrepreneurs are interested in Huawei, especially for you who have worked beside Mr. Ren, I would like to ask a question: What is the deepest impression he left in your heart? What influence did he have on you?
Chris: That's a very good question. When I was at Huawei, Mr. Ren left a very deep impression on me, although there are only more than 60 people in Meixun, which is not at the same level as Huawei, but I learned a lot of very valuable things about managing the team and motivating the team from Mr. Ren.
In fact, when we make seas, we often bring some skills we learned at Huawei. I would tell my clients that in addition to making money, you also have to bring your sense of mission, values, and vision overseas to make the local team feel the spirit of the enterprise. I've learned this from Huawei, especially Mr. Ren, who is willing to set his goals and vision very high. Before joining Huawei, I also started a business for 6 years, and I thought that my standards and requirements for myself were very high, but after entering Huawei, I found that the people around me were really hard and really hardworking. It's not about how much time you work, it's about really putting your heart into it every day.
Luo Xunyu: Yes, Mr. Ren is very motivating and has a strong sense of vision. I've heard that he often holds meetings at work, and foreign companies and Chinese companies have a lot of different understandings of meetings, I would like to ask you, as a "China expert", how do you feel about the meetings of domestic companies?
Chris: The meeting is a good microcosm of the differences between China and the rest of the world.
Metsun has been trained in consulting and cross-cultural management in China, the United States, and Germany. When Chinese companies hold meetings, it is often 20 or 30 people in a room to listen to the leaders announce their decisions. It may be that the communication and discussion are done before the meeting, and the purpose of the meeting is mainly to listen to the instructions of the leader.
But in Germany, or in the United States, you are prepared to discuss, argue and even quarrel when you have a meeting, including with your boss, in order to arrive at an ideal decision or conclusion. In Germany, if you have a discussion or argument during a meeting, it is a sign of respect for your leader.
So, what happens if you throw a German at Huawei's headquarters in Shenzhen for a meeting? There must have been a spark, because the German expert wanted to show respect, he wanted to argue with his leaders, but Chinese leaders often didn't want this kind of argument, especially in front of a lot of people.
So this is a very important microcosm of cross-cultural conflict.
Luo Xunyu: Huawei has been globalized for a long time, and it has a presence in many countries, but such a problem still exists?
Chris: This shows how difficult cross-cultural communication can be. Of course, I think Huawei has done a good job in this regard.
To manage a company well, it is not only necessary for the Germans to know how to do things in China, but also for Chinese executives to understand local customs when they go abroad. To give you another example, I used to bring an American client to Wuhan for a meeting, and the Chinese side invited us to dinner, and it was a round table, and then the Chinese host brought food to my client, put it on his small plate, and then the American guest in his 50s got angry.
Luo Xunyu: Why?
Chris: He was very unhappy and said, "I can use chopsticks." Again, the Chinese host wants to show respect, I want to serve you food, but the other party feels disrespected, so the differences between cultures are very important.
Luo Xunyu: I see that a classmate in the live broadcast room said it very well, he said that most of the content of the meeting of Chinese companies is propaganda, while most of the meetings of Western companies are discussions. If most of the overall meeting culture of Chinese companies lacks discussion, will it lead to a lack of scientific decision-making?
Chris: Yes, I think there may be times when the discussion is a little inadequate. In fact, this requires a balance, a balance of execution and full discussion. As a North American, when I see a lot of European companies developing their business, I want to say "Don't worry anyway" to them, and the discussion should have a degree, and to a certain extent, there is no need to discuss it anymore, and make a decision quickly. But they have to pick out the details to perfection, and the downside of this is that execution and speed are greatly impaired. Chinese companies, on the other hand, tend to have strong execution and fast movements, the so-called "Shenzhen speed". Personally, I am also a "Shenzhen faction", and I think that beginning is more important than perfection. You take the first step, the second step will be clearer, this is my own style, and it is also a concept that I say to most of my friends who want to start a business. You don't plan too much at first, because your planning is 99% wrong.
Luo Xunyu: The idea of whether there will be a boss may be wrong, but everyone dare not say it, and in the end it will lead to bigger problems.
Chris: Personally, I think it's better to make a wrong decision than to be overwhelmed. Mr. Ren Zhengfei also has this concept, he said that we don't want to go in the right direction, just walk in the roughly right direction, and then fine-tune in the process.
There is no absolute right or wrong for many questions, such as "going to sea", if you say wait a few more years, wait until everyone learns English well before going to sea, it may be too late.
Luo Xunyu: Speaking of going overseas, we know that Huawei has faced a lot of challenges overseas in the past few years, and you have also participated in the process of resolving some incidents.
Chris: Actually, when we do any business going overseas, everyone can learn from Huawei, which is results-oriented. What results do we want to see? What is our goal? I think Huawei is very results-oriented, and that's what I've learned from Mr. Ren.
For example, if you want to do overseas business, it is easy to decide that we should hurry up and make a round of press releases to publicize that we have decided to go overseas. But I would suggest that you stop for a moment and think about what your goals are and who you want to influence.
If you are a to B company and want to influence the overseas market, it may not be the best choice to do a round of media promotion, because your customers are not in the audience of those media, a million people see them, but none of them are your customers, and that kind of publicity is also a waste of time.
Luo Xunyu: Therefore, it is very important to be able to understand the local market, user needs, and even legal rules and media habits, that is, to have a local mindset.
Chris: Actually, this is the biggest difference between going overseas in recent years and the previous two or three decades.
In the past, China, as the world's factory, was engaged in export trade, but now it has to develop into a new era of brand management model, team going overseas or globalization. If you only do export, you don't really need to care about overseas local consumers, and you can wait for payment after the goods are exported. But at this stage, you have to have a local team, a local brand, and you have to think differently about what problems will arise with your own reputation and your own brand.
Not only the United States, but in fact, most countries in the world are very concerned, whether your company comes to my homeland to plunder resources, or whether you really care about us, whether it will cooperate with charities, whether it will recruit locals, whether it will help our community become better, this is the biggest difference from the previous export trade era.
02 New opportunities: not "going global", but localization
Luo Xunyu: Regarding going overseas, Chris, I am also very interested in your personal choice, you have such a good position in Huawei, I believe that the salary and treatment are very good. Why did you leave Huawei and start your own business in such a period? I'm sure you should have seen some opportunities, what kind of opportunity is this? What does it mean for Chinese companies?
Chris: Good question. I also started my own business for 6 years before going to Huawei, so I was actually an episode at Huawei, not the other way around. As for why I left Huawei, it is because I often need to connect with overseas consulting companies or service providers in my work. When I came into contact with these institutions in North America or Europe, my feeling at the time was that the rhythm and spirit of these institutions overseas was definitely not the spirit of Shenzhen. They are very slow to respond, and instead of speaking with results, they collect money by the hour, by 15 minutes, and by the time they reply to my email, like a law firm, without any promise of results.
So I see an opportunity, that is, Chinese companies, represented by Huawei, have a large number of giant enterprises from Shenzhen, Hangzhou, Shanghai, Hefei, and Beijing, as well as smaller waist companies, when they go overseas, they can't find services and partners that meet their requirements and meet their expectations.
So, I made a decision to come out of Huawei and start Miscent. I have a commitment to bring the rhythm of Shenzhen overseas. Because of the time difference, the day in China is the middle of the night in New York, and it is no exaggeration to say that we can make sure that you can communicate with an American on WeChat in Chinese at any time.
Luo Xunyu: Is it also because you have seen some changes in Chinese companies going overseas, which has brought better opportunities?
Chris: Yes, I don't really like the word "going to sea", because going to sea is just a momentary action, and you can go to sea by buying a ticket. However, the truly successful enterprises are those with a global vision, and they must be localized in a specific country, even in a specific city. For example, the values of New York and California are also very different, and London in the United Kingdom and small towns in the United Kingdom are definitely different in terms of values and consumption concepts, so we must operate locally.
But as your question says, some big changes have really taken place in recent years. It's a bit like the United States after World War II to the world era, when American companies went overseas with advanced management models, took American brands to build factories and recruit workers around the world, and now Chinese brands bring China's advanced management models and advanced technology to overseas factories and recruit locals.
Therefore, the needs and pain points generated in this process are some bottlenecks for Chinese enterprises. For example, in the United States, how can you get an American to work overtime for you, work hard, and teach him to Chinese and meet Chinese expectations, which is very difficult, and it is completely different from the export of goods.
Luo Xunyu: China's entire journey to the sea can be divided into different stages, which means that the capability model at this stage is different.
Chris: Yes, I will probably divide it into four stages.
The first stage is trade, which may not even have products, and exports some resources, such as grain or oil.
The second stage may be to do some cross-border e-commerce with the help of Amazon, not to go overseas as a brand. Because when your products are sold on Amazon, overseas consumers don't trust your brand, they trust Amazon.
The third stage is the equivalent of Amazon's "Designed by Japan", which starts to make its own independent station. Then there may be a certain layout overseas, such as registering a subject and starting a small range of recruitment.
Then the fourth stage is complete internationalization. Companies like Xiaomi, Huawei, and Bloomage Biotech.
I think most of the Chinese companies going overseas now are between the second and third stages. Do a good job on Amazon, and then start recruiting someone in the United States, let this person be a representative to find offline sales channels, find more partners, and even raise funds in the United States. These are new opportunities if they are grasped right.
Luo Xunyu: So, which industries or companies in the industry do you think are the most promising to go out? We often hear people say that it must be difficult for certain industries to go to sea, and some industries are the easiest to go out, what do you think?
Chris: As for what industries have more opportunities, I suggest that you still look at the market. In terms of compliance, you get a lawyer who can tell you within two or three hours if you can do it. If you can do it, you can put this concern aside and boldly and quickly develop your business with the spirit of Shenzhen. Don't hesitate to go overseas on the question of whether you want to go to China, where you go, you have to localize, and then you can make your money.
So your perspective is very important, the importance of localization is not only to find a local person who represents you on the surface, but more importantly, to empathize, what opportunities are available to the local community and local society, not only in the United States, but also in the United Kingdom, in Germany, and in Africa.
Luo Xunyu: So we still have to find a way to localize ourselves. So, in addition to the concept, which aspects of localization do you think are more important in the enterprise? Also, I feel like you've been emphasizing the concept of long-termism.
Chris: Yes, long-termism is very important. If you want to get rich overseas, I would advise you not to go to sea, just buy a lotto ticket, OK.
So, if you want to develop long-term, what aspects of the enterprise need to be localized? In fact, Meixun has a methodology called five Rs in one, five Rs in Chinese, starting from our research compliance, to sales channels and marketing content, advertising, to investor relations, to charity and ESG efforts, to give back to the local community locally, and finally to HR recruitment, management and retention, motivating these aspects, these five modules will solve most of your company's pain points, including compliance and government relations level, customer level, investor level, ESG and localization contribution level, and human resources, these five modules are on the localization process.
So, how can we do these five aspects well?
Then there needs to be a fundamental starting point – trust. That is to say, whatever effort we make, behind the brand, is that we want these groups to trust us.
If you're hiring a local American, why would he want to join your company? He has to trust you, he has to think that this boss is better than me, I will go further with him, and he is good to me. If he doesn't respect you and doesn't trust you, it won't last long.
Luo Xunyu: A veteran entrepreneur from the Dark Horse Battalion once asked me, "I think going to sea is already a red sea, and there are already a lot of people making the sea in Shenzhen. ”
Chris: I can give you a very direct answer, don't study in Shenzhen, you have to localize overseas.
If you are studying going overseas in Shenzhen, you are just following others, 90% of them are talking to China, and then doing publicity on TikTok or Amazon. But the one who really succeeds in the long term in the future is another approach – get out there and see. For example, on May 20th, I will fly to Paris to attend a consumer electronics show and make French friends there; In September there is another exhibition in Germany, find customers there and make German friends. If you're in Shenzhen, Hefei, or Hangzhou, I think these are very far away.
03Do three things well: long-termism, localization, and result-oriented
Luo Xunyu: So, here's the problem. Localization has to face many complex problems, such as the difficulty of recruiting, cultural differences and trust issues after recruitment, including how to delegate authority, benefit distribution, and even taxation and other aspects of the problem.
Chris: I have a suggestion, if you have the opportunity to do anything overseas, you should go to the target market and drink coffee, not to recruit people, but to drink coffee and make friends locally. The purpose of this action is to understand the local situation, a cup of coffee may save hundreds of thousands, millions of tuition fees, so that you will not take so many detours overseas. First-hand information is paramount. This is also what I learned from Ren Zhengfei, a cup of coffee absorbs the energy of the universe.
By drinking coffee, you will hear unexpected information and maybe you will have a new direction, so this is the first step. If you want to recruit people, it is also recommended to drink coffee first before recruiting.
There is also an important suggestion, the first stage is that we need to sort out ourselves, as the founder, as the basic information of the brand enterprise, we want to appear more professional and local, so that it is easy for the locals to understand you and understand your company's business.
Luo Xunyu: What do you think need to be paid attention to about the risks of going to sea?
Chris: I think there are three things that people can easily take that they have to do well.
First of all, we need to take a long-term view. Don't be under the illusion of seeing results in a day or two, think long-term. Because Haige is a new market, our accumulation in China will basically not bring any benefits, even if the domestic well-known brand, to overseas is the same as a store without a brand, so this is from 0 to 1, long-termism is very important.
The second is localization. I'll give you an example, there is a company in California that does marketing, recruits a few locals who do marketing content, does some advertising content design, the local team produces a very professional marketing package, and then sends an email to the leader of the Shenzhen headquarters to review and approve, after the Shenzhen team reads it, it feels wrong, there is no brand material for us, it doesn't match our main line, it needs to be adjusted, and then they adjusted about 40% and sent it back to the American team to get it. The American team will be very unhappy when they see it, but they will also compromise, and the things they make will feel weird and the effect will be very mediocre.
In terms of localization, trust the local team, give them the right to take responsibility, have the right to make decisions, have the responsibility to face their mistakes, and coach them when they make mistakes and give them some advice. Overseas, it's not a matter of a day or two for you to train someone, and sometimes it's more painful, but the long-term return on investment will be very large.
The third is result-oriented. We can go overseas with Shenzhen's requirements, which is a very interesting point, why going overseas is a big trend, because what we see is China's high-tech, China's management model will bring good results, we can pass on to the locals, you can do this better, in Shenzhen, you can do this in half the time. After World War II, Americans brought advanced management models to the world and empowered many local enterprises, in fact, now it is reversed, it should be Chinese who can manage Americans.
Luo Xunyu: Regarding localization, in fact, I have another question, many Chinese companies will choose to cooperate with cross-border e-commerce to open overseas markets in the first step, such as Amazon, TikTok, Temu, and AliExpress, etc., what do you think are the advantages and disadvantages of distributing goods through online channels?
Chris: First of all, I think you just said that this route is more suitable for to c products, and to b products have another collocation. We often ignore to B, in fact, the overseas To B market is 25 times larger than the To C market, and the online market only accounts for 30% of the North American To C market, don't just focus on online, if you want to make money, you still have to target offline sales channels, North Americans still spend more offline.
Of course, the advantage of the online platform is obvious, you can directly sell your goods, but the disadvantage is that people have customer resources, they are the boss, they don't want you to appear on this platform, you are immediately gone, and then you have nothing. This was the case with Amazon's mass takedowns a few years ago.
Therefore, if you are doing cross-border e-commerce, I would like to give you a very serious advice, don't stay at this stage, because if it is not a special insurance, you may lose all your business overnight. The e-commerce line must be done, but we must diversify, our sales channels, our revenue stream, our independent stations and other opportunities, and we must diversify our revenue sources.
Another problem is at the brand level, if you sell on Amazon, people don't trust you, they trust Amazon, they don't know you, they know your price and features. You will find that after a category becomes popular, many people will fight a price war, and then you will slowly stop making money. It's because you don't have a brand that a brand can make you more money.
Luo Xunyu: Ok, just now you mentioned that the B-end market is 25 times larger than the C-end market, so what are the good products or services on the B-end that can have good prospects in a market like North America?
Chris: There is a big difference between to c and to b products. When doing overseas markets, to c's products rely on your basic credibility and a lot of popularity, that is, you have to do a lot of advertising, the so-called "drainage", traffic is very important, but the B-end is different, and the B-end will buy your services and products with a high degree of trust.
Because the customer unit price is much higher, you are selling a platform and a solution, and the customer will do a more comprehensive all-round background investigation, so in fact, I would suggest that if you are doing to B, you don't need to do any promotion.
What you have to do well is your endorsement, and you have to get two or three media outlets to give you a comment, maybe a positive report. The purpose of posting this article is not to let people see it, but to let them search for a link when they search for your brand, and then see that the company has been reported by credible media in the past, or positively, which is an endorsement. It's very important that your customer base will research who you are and whether you are reliable or not, and then decide whether to buy your product or not.
Another point is that to do business with B, you must have a local team. Will a local customer want to communicate with you or a local? If you send me to Korea to sell goods, I will fail. Why? It's not because I'm not trying hard enough, it's because I don't understand Korea. No matter how good the sales are, it won't work in a new market. You need to do a lot of training, develop your sales team locally, and let your soldiers deal with your customers. The To b business has much higher requirements for localization.
04 Summary: It is necessary to use "Shenzhen speed" to go to sea
Luo Xunyu: Thank you Chris. Let me summarize today's interaction:
We invited Chris today to share a lot of views related to going overseas, but Chris said that he doesn't like the word going to sea, because going overseas is just a momentary action, but for Chris, going overseas should essentially establish a global vision, follow long-term thinking, and do a local business.
And today Chris gave us a lot of reminders about how to do a good job of localization. The first step is to define your vision, and then it's important to focus on building your brand.
As for how to build a brand, Chris and his beauty company also provide a methodology, called "five Rs in one", the so-called "5R", that is, PR public relations, GR government relations, BR business development relations, IR investor relations, HR human resources relations, "1 in one" is to be able to form a very good trust relationship, in the local, so that the local people resonate with your brand, which is very important.
In the process, Chris also constantly emphasized that whether it is your product, your organization, or the market you want to face, there are cultural differences from China. You should learn about local customs, and being respected and not being respected may be the difference between being and not being respected. The conflict caused by this cultural difference is a hurdle that you must face in the process of going to sea or globalization.
There is also a very important point, which he also felt and experienced from Huawei, and then engraved a feeling in his bones, that is, it must be result-oriented.
Going out is more important than thinking and struggling at home. It may also be that the first step of going out is not perfect, but the action of going out itself is better than no action at all. So he gave a very good advice to China's current entrepreneurs, to use Shenzhen speed to go to sea, and he said not only to focus on the cross-border e-commerce market of To C, overseas, there are markets for both To B and To C, and the To B market is 25 times larger than the To C market.
Thank you again Chris, I hope Chris will come to our dark horse to break the game training class in the future, to share with our dark horses, then it will be more specific and richer, see you in Shenzhen.
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