The W Hotel project is under construction in downtown Kuala Lumpur, Malaysia, by MCC Overseas. The above-ground main building is 230 meters high, and will become another landmark architecture in Kuala Lumpur COURTESY OF MCC OVERSEAS
A Chinese company initiates another round of going global
It takes more than high-quality products and services for Chinese enterprises to complete internationalization, according to a Chinese business magnate.
"Localization of employment, management and operation is the key to making the cut in overseas markets," Zou Weimin, Chairman of Metallurgical Corp. of China (MCC) Overseas Ltd., told ChinAfrica.
From a remote water treatment plant in Nigeria to the W Hotel in Malaysia, 30 years have elapsed since MCC made its first attempt to test the water in foreign markets. MCC Overseas has now spread its business to more than 30 countries and regions.
Since China unveiled the Belt and Road Initiative in 2013, Chinese enterprises have revamped efforts to expand their businesses overseas with vigor. "On the one hand, we continue to adjust overseas business layouts and dig up more opportunities. On the other hand, the company energetically pursues the transformation and innovation of business models, shifting from relying on lower costs and labor services to exploiting capital advantages, consolidating resources and providing clients with all-round and customized project management service," said Zou.
While strengthening its existing markets, MCC Overseas has made endeavors to add countries along the Belt and Road into its business map.
In the past, the company was inclined to focus on Southeast Asian countries, such as Viet Nam and Cambodia. Now, it has also made some business arrangements in Central Asia and Europe. Moreover, in response to the Belt and Road Initiative, more energy and resources have been devoted to exploring the African market.
Zou Weimin (first left), Chairman of MCC Overseas, inspects a project site in Malaysia in February COURTESY OF MCC OVERSEAS
Following the Belt and Road Initiative, in the past three years, MCC Overseas became deeply aware of the importance of localization. "To take root in the overseas market, a company should start with the localization of human resources, which means lower manpower cost and more jobs for the local society," said Zou, noting that recruiting local people is quite necessary when moving toward internationalization.
Take its Malaysian branch for example. Of its 248 staff members, only 10 are dispatched from China, and there are 58 local employees engaged in the management work.
Aside from that, efforts have been made in localizing operations. As soon as the company was founded in 2006, MCC Overseas set the goal of growing into a global engineering management and service company. Over the past decade, it has secured long-term sustainable development by establishing branch companies and agencies in the host countries of its projects.
Hitherto, the company has realized localization in countries such as India, Malaysia, Indonesia, Brazil and Russia.
"We have obtained a good knowledge of local policies and laws and maintained close contact with local clients, governments, embassies and consulates. That helps us carry out market development and management well and win attention and trust from local markets," said Zou.
While people-to-people exchanges are an important step in pushing forward the Belt and Road Initiative, MCC Overseas has gained its own experience in volunteering to perform social responsibility abroad.
Joining hands with the School of Public Policy and Management of Tsinghua University in 2012, MCC Overseas has funded over 180 foreign students from 72 countries to receive education through the International Master of Public Administration (IMPA) program, most of whom come from countries and regions along the Belt and Road.
As it turns out, the IMPA program has played a positive role in assisting the company to dig up overseas business opportunities. Zou recalled his working visits to South Africa and Tanzania, during which a number of project contracts were signed, and part of the credit went to graduates fostered and funded by the company's IMPA program.
"Internationalization does not just mean expanding global business; it also means local people and society are willing to accept a company," Zou said.
Zou has become increasingly aware that risks may arise from capricious changes in the international economic and political situation.
"Although many countries along the Belt and Road have shown willingness to receive investment from China, the volatile political situation in some countries may lead to sudden changes of foreign policy and then bring enormous risks to investment," said Zou, suggesting that more study should be carried out on the political situation and legal environment of destination countries and that before making investments, related response plans should be formulated to tackle possible risks.
In addition to a prudent attitude toward the global economic and political situation, MCC Overseas also infuses business adjustment and innovation with risk awareness, said Zou.
In the past, the company adopted a simplistic operation model - participating in tender bidding and then starting construction. Now, more multilateral cooperative projects are on the plate.
"Coordinating with other parties and allocating profits to achieve win-win results needs to be probed and practiced more," said Zou.
Beyond all that, funding is a problem that many Belt and Road projects confront and cannot solve by counting entirely on local governments and banks. On the other hand, since most of them involve infrastructure construction, the demand is urgent.
"MCC Overseas has tried some new ways to seek breakthroughs, such as industry funds and exclusive selling rights. Any innovative move may have potential risks," said Zou. "In terms of finance, innovation can even multiply risks, which requires us to be on the alert all the time."