【Multinational companies in China】Nguyen Fang: Multinational companies are seeing the growth of the high-end market in China

Chinanews.com, June 6 (Zhongxin Financial Reporter Wu Jiaju) Boston Consulting Group (BCG) is a global management consulting firm that has helped many multinational companies expand their market in China. In 22, under the new situation, what changes have occurred in the layout of multinational enterprises in China? How do they view the Chinese market?

Recently, Nguyen Fang, Managing Director and Global Senior Partner of Boston Consulting Group (BCG), was interviewed by Zhongxin Finance to answer relevant questions.

Nguyen said some companies are investing more in the Chinese market because they see growth in China, which is a high-end market growth based on scale. They see that the consumption power of the Chinese market, whether it is the To B side or the To C side, is constantly escalating.

An excerpt from the interview is as follows:

Zhongxin Finance: Now that the global economy is gradually emerging from the impact of the epidemic, what opportunities and challenges do you think will face for enterprises engaged in global trade?

Nguyen Fang: Now China is implementing the "dual circulation" strategy. In such a general environment, we roughly divide international trade enterprises into two categories, one is pure export enterprises, and the other is international capacity layout enterprises.

There are two main reasons why export-only enterprises face challenges. From the perspective of external factors, the economic downturn in Europe and the United States has led to a decrease in their overall demand. From the perspective of internal factors, many domestic supply chain systems and ecology are still in the process of slowly recovering. The opportunities faced by these enterprises are also reflected in two aspects. On the one hand, companies can do a good job of industry integration, such as moderately considering mergers and acquisitions. On the other hand, enterprises can practice their internal strengths, not only their own brand, core competitiveness, but also management, especially international management.

Enterprises with international capabilities are enterprises rooted in China but already multinational enterprises. For these enterprises, it is necessary to do a better job in the "dual circulation", and do a good job in the internal circulation and the entire Chinese market in order to better compete internationally. At the same time, it is necessary to take root in the local area and make good links with other countries. "Double circulation" grasps with both hands, and both hands must be hard.

Zhongxin Finance: Under the new situation, what changes have taken place in the layout of multinational enterprises in China? With the continuous transformation and upgrading of China's economy, what are the suggestions for multinational enterprises in China?

Nguyen Fang: Many multinational companies, during this period, in the past few years of the epidemic, have made a lot of large-scale investments, and they have seen the growth of China. At the same time, for many multinational companies, they see the growth of a high-end market, not only the scale of the Chinese market, but also see that on the basis of scale, the consumption power of the Chinese market, whether it is the To B end or the To C end, is constantly escalating.

Multinational enterprises should first clarify the positioning of the Chinese market, whether it is looking at revenue, scale, or profit, whether it looks at China's innovation power and regards China as an innovation center, or whether it understands the competitive situation in China and regards it as a learning ability center.

At the same time, when many multinational enterprises consider a national strategy, they start more from "me" and consider the external environment relatively less. Therefore, for multinational enterprises, on the one hand, they must consider their own strategy and how to align with the national strategy, such as China's emphasis on "dual circulation", innovation and industrial upgrading. On the other hand, we should also consider how to better combine our own product services and different regional strategies, and combine national strategies, regional strategies and enterprise strategies to truly achieve "win-win".

In addition, many companies believe that the group needs to give China a certain authorization, but this is actually a two-way street. China hopes that more people from the group's headquarters will come to China and understand China, and at the same time, China will also let the headquarters know more about what is happening in the Chinese market. Therefore, this is not only a problem of organizational control and authorization, but also a problem of communication, mutual understanding and knowing each other's positioning, in order to truly mobilize the enthusiasm of the organization and local talents, and adapt to China's local culture.

Zhongxin Finance: What is the trend of Chinese enterprises going overseas now? What are the suggestions for Chinese enterprises going overseas?

Nguyen Fang: China implements the "dual circulation" strategy and encourages Chinese enterprises to continue to go overseas, and the process of going overseas is a process of internationalization and encouragement. In terms of trends, there are several motivations for Chinese companies to go global. The first is to seek a pure market, find an external market, not just satisfy the Chinese market. The second is to make different competence centers on a global scale, make full use of the international layout, and make up for its shortcomings in management, innovation, and talents.

If Chinese companies go overseas and only use foreign countries as revenue centers, they need to consider which markets are worth entering. On the one hand, there are pure market elements, such as: who are my customers; The local match of my product; What is my potential future revenue and market share? On the other hand, there are non-market elements. For example, the matching of local customs and corporate culture; Whether the local business environment can make up for the obstacles I encountered in the process of going overseas, or whether the local business environment will have some promoting effects; Can a local partner help me better rooted in the local area?

For Chinese enterprises that deploy international capabilities and embrace internationalization, they will regard non-market factors as more important than market factors. For example, whether it can closely integrate the national strategy of their own company with the local national strategy and local regional strategy; Do I have a corresponding alliance with the local pillar industry; What does these local partners mean to me; Can I influence some local business strategies and policies to better help Chinese companies go overseas, take root in the local area, and then form a local ecosystem?

Zhongxin Finance: Digital transformation is now the focus of many enterprises, what advantages have enterprises that have completed digital transformation gained?

Nguyen Fang: On the one hand, behind the digital transformation is the desire to understand the market demand more quickly and quickly meet the needs of customers. Therefore, the real core of digital transformation is to help enterprises better customer-centric, not just products, services, and endowments as the center, and the "soul" and "god" of digital transformation are customer-centric.

On the other hand, these companies gain organizational flexibility. Through digital transformation, many organizations have become flatter, decision-making chains have become shorter, information has become more transparent, and enterprises have become more agile as a result. In the spirit of digital transformation, innovation is a combination of bottom-up and top-down. In this case, it is a great challenge to tolerate the change of corporate culture well and allow bottom-up innovation, which is why some large financial institutions have difficulty in digital transformation. Compared with asset-heavy enterprises, the digital transformation of asset-light enterprises will be easier. In addition, digital transformation is not enough to be customer-centric, lighter, and more agile. More importantly, a better cultural encouragement of bottom-up innovation is also a benefit that businesses can reap from digital transformation. (End)