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China’s Path to Success

In just a few decades, Chinese companies have evolved into international conglomerates capable of competing at the highest levels.

(originally published by Booz & Company)

Learning from Dragons Who Are Learning from Us: Developmental Lessons from China’s Global Companies

Mary B. Teagarden and Dong Hong Cai

Organizational Dynamics, vol. 38, no. 1

Date Published: 
January–March 2009

Many successful Chinese companies have followed a similar path to success. In this paper, the authors examine the strategies that four of China’s largest multinationals — Lenovo, Haier Group, TCL, and Huawei — pursued to become major players in their respective industries. Each company started off by developing a deep understanding of existing technologies, usually through collaboration, joint ventures, or licensing agreements with foreign companies. Lenovo, for example, originally distributed computer parts made by another technology company, and didn’t develop its own proprietary hardware until years later. This strategy of imitating foreign firms gave companies like Huawei and Haier the opportunity to absorb the best practices of the world’s biggest corporations. They first used these capabilities to dominate the Chinese market, and later used them to build up their manufacturing and engineering skills to compete globally. (Half of Huawei’s workforce is, to some extent, engaged in research and development activities.) This strategy of imitating and eventually innovating on top of existing technologies has enabled some Chinese companies to succeed at the highest levels. Lenovo went on to purchase IBM’s PC operations, making it the world’s third-largest computer manufacturer, and Haier has acquired dozens of companies worldwide, including Maytag. 

Bottom Line:
The success of China’s largest multinationals provides one model for growth and expansion: Learn from others first and then leverage that knowledge to build talent from within.

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