How do Chinese companies succeed internationally

The subject is viewed with a mix of fear and fascination: Chinese companies are expanding on all continents. Setting these sentiments to one side, the causes of this success are not always clear. Two seemingly contradictory qualities explain these successes: the capacity of Chinese firms to go beyond a purely traditional mindset, and their skill at applying their specific strengths across the globe. With this paradoxical approach, born of openness to the world and confidence in their own qualities, these companies are deploying their skills worldwide.

Management openness

The second area of change is management. Often of family or clan origin, global Chinese companies have been able to go beyond their purely traditional influence by appointing managers who have worked and studied outside China (particularly in the US) or local managers with the ability to understand and enrich their model. For example, Ariel Wizman, a journalist and entrepreneur, has become one of Miniso’s partners in France. Jonathan Siboni, another partner, has worked for several years with China in the luxury goods sector. Combining practical and fun clothing, Miniso sells more than 15 categories of everyday and household products: the brand and its products are made in China, with an abundant, joyful presentation of Asian inspiration drawing on the manga universe or K-pop. Its success is indisputable: 16 stores have been opened in two years.

Teambuilding

The third criterion of success is the ability to work in teams. Once deeply focused on their own networks (Guanxi), successful Chinese companies have learned how to form strategic and complementary partnerships for their products and are open to outside shareholders, something at odds with a once highly protectionist and clannish culture.

The third strength is extreme adaptability. This takes us back to the concept of the long term linked to the speed of the leopard. Acting quickly and attempting be the first into a new market may be more profitable than conceiving a perfect strategy. This does not imply a lack of long-term vision. Doing business without having a strategy (this can come later) is not necessarily a mistake. What matters is controlling the long term and the short term. This approach is deeply woven into Chinese culture: in Confucius, as well as in Korea, fluidity in and between things matters far more than any definition of a concept set in stone. As Lao Tseu taught, “Become as fluid as water that always finds its path by adapting to the ground”.

Aware of the opportunities offered by the Chinese economy, we at Carmignac prefer to capitalise on this trend by investing in innovative companies that have successfully grown internationally. Emerging Asia is the region where we identify the largest number of innovative companies in the technology, consumer and internet sectors, all at the cutting edge of the digital revolution.

Within our emerging market allocations, and in particular in our strategy dedicated to China, Carmignac Portfolio China New Economy, we have invested in companies such as Miniso¹, the specialist in everyday consumer products, present in more than 100 countries thanks to its 5,500 stores across the world (3,300 in China and 2,200 outside China), with 50% of net profit generated abroad.

What’s more, our flagship emerging equities fund, Carmignac Emergents, is exposed to promising Asian stocks thanks to their technological edge, large-scale production and capacity and strong appeal for semiconductor manufacturers¹. For example, the Fund is invested in the specialist manufacturer of batteries for electric vehicles, and Taiwan Semiconductor’s biggest foundry¹.

¹The brands and logos used do not imply any affiliation with these entities, nor their approval.
The portfolios of Carmignac funds may be modified at any time without notice.