Human capital key to success in US markets

Human capital is the key to success for Chinese companies doing business in the US, leading industry experts said during a recent panel discussion in San Francisco.

The discussion was held as part of the deliberations during the release of a new survey report - Chinese Enterprises in US - organized by China General Chamber of Commerce-USA and the China Business Studies Initiative of the University of San Francisco.

Representatives from Chinese enterprises, business schools, law firms and overseas organizations participated in the discussions held at the University of San Francisco on Friday. The survey was conducted by Yang Xiaohua, associate professor at the University of San Francisco, and Richard Huang, executive director of China General Chamber of Commerce-USA.

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"The event is aimed at bringing policymakers, business insiders, business organizations and students together to assist Chinese companies in going global," said Yang.

The report dwelt on details on the business environment for Chinese companies investing in the US. It also emphasized that such companies need to be guided by local talent and experts, which must be integrated with the local community.

According to Yang, Chinese outbound investment in the US is growing and the trend is unstoppable. "Last year, Chinese firms invested more than $14 billion in the US, which was double that of the year before," said Yang.

However, some Chinese enterprises operating in the US are not doing that well and they have to learn how to expand their business in a totally different business environment. Although more than 60 percent of Chinese companies in the US make profits, there are still more than 30 percent of them that operate at a loss, Yang said, adding that the high cost of doing business in the US is one of the reasons for their failure.

Yang said Chinese companies should invest in the US by hiring local talent and training their executives at US business schools to make their business more localized. "Human capital is the key for Chinese companies here in the US to gain huge success," she said.

"Improving cultural intelligence is also very important," said Yang, who defined cultural intelligence as knowing how to do business in a different environment, where the cultural, legal and political systems are totally different.

Huang from the China General Chamber of Commerce gave an example of the differences. "Chinese businessmen prefer to make friends first and then do business," she said. "But in the US, businessmen prefer to do business first and then make friends with you."

Yang said that Chinese companies operating in the US vary in scale. "A large proportion of them are small-and medium-sized here in the US, even though they are very large companies in China," said Yang, explaining that they are testing the waters and some of them believe that they can be regarded as global companies only if they have operations in the US.

Stanley Kwong, a professor of marketing at the University of San Francisco, said that during the 1990s, the business school of the university played an important role in providing MBA and executive MBA programs for China's future business leaders. He said the university is still a big player in providing education to hundreds of Chinese students.