Chinese giants aim to expand

31 July 2009

BEIJING: Major Chinese companies such as Lenovo, the IT giant, Haier, the consumer electronics firm, and Li Ning, the sportswear and apparel specialist, are seeking to expand their operations internationally, at the same time as a large number of their multinational rivals cut back on such expenditure.

While many brands from around the world have proved keen to enter the Chinese market, few domestic properties have successfully managed to expand outside of their home country thus far.

However, the number of firms headquartered in the world's most populous nation that were listed in Fortune's annual rundown of the top 500 corporations around the globe rose to 37 this year, compared with 28 in 2008, and eight a decade ago.

Lenovo, the world's fourth biggest computer manufacturer, bought IBM's computing business in 2005, and was one of the main sponsors of the Olympic Games held in Beijing last year.

In its most recent annual report, Yang Yuanqing, its ceo, said that sales "grew faster than the market in such key emerging markets as Russia, Brazil and Turkey."

This demonstrated, he continued, that "we can tailor our proven China business model into success in other emerging markets, which collectively represent tomorrow's high-growth opportunities."

"Extending the success of our China business model into emerging markets such as India, Russia and Brazil represents a major opportunity for Lenovo," Yang added.

Among other recent innovations, the company has enhanced its online sales operations in the UK, and opened "concept stores" in Malaysia.

Anthony Feng, a spokesman for Lenovo, argued these latter outlets were "a key part of our strategy" of expanding abroad.

"We are renovating existing stores with this new design and are rolling out fresh new ones in both mature markets and emerging markets."

"Given the current global economic recession, emerging markets are the growth engine for us to sell PCs to consumers," he said.

Li Ning has also launched its first shop outside China this year, which is based in Singapore, and focuses on badminton, a highly popular sport in both Asian nations.

Nicholas Chong, Li Ning's chief financial officer, argued this move "is an important step of the group's strategy in sports category differentiation and brand internationalisation."

"Expansion into this market not only shows our determination to become the sports brand synonymous with badminton, it also laid a solid foundation for the group's expansion into overseas markets," he said.

Earlier this year, Haier acquired a 20% share in Fisher and Paykel Appliances, a New Zealand-based appliance manufacturer, enabling it to sell its products in both that country and Australia.

Haier is "determined to make further inroads both domestically and abroad," said James Heimowitz, ceo, North Asia of Hill & Knowlton, which works with the consumer electronics firm.

It has already established an extensive global network of outlets, including US chains like Wal-Mart, and Target, alongside Media Markt and Carrefour in Europe, and Yamada and Jusco in Japan.

Data sourced from AdAge; additional content by WARC staff