China Moving up the Value Chain at home and overseas

Second event in the series, 21 September at Chatham House

This panel-led discussion event, considered "informative and thought-provoking," was held at London's Chatham House on 21 September and attended by a China-interested audience from various industry sectors.

A quick survey at the beginning of the event revealed that few Chinese brands have reached real levels of international recognition, even to a China-familiar audience. The well-known brands such as Lenovo and Huawei were mentioned along with a handful of lesser-known ones including BYD and ZTE.

The panel gave a broad insight into the challenges, motivations and realities of various sectors in their bid to move up the value chain as well as information relating to government-led policy, funding and business strategy. Sectors that were highlighted included finance, renewables, automotive, engineering and aerospace. Benjamin Schmittzehe, CEO of S & P China Advisory, talked of the "historical insularity" of Chinese companies and their traditional use of middlemen in overseas markets. He also pointed out the emphasis in Chinese companies given to turnover and market share rather than margin. As a consequence, research and development and product design are low on the agenda and lacking funding.

China Telecom's Benjamin Cheng, gave an overview of the company's expansion globally being driven partly by a need to go where their customers go and also the market opportunities in "synergising" with overseas partners to develop new products.

Chairman of Neil Blakeman Associates, Neil Blakeman, focused on the political will and motivation of pushing Chinese companies up the value chain and that timing, particularly in the financial sector, requires companies to go abroad to service their customers there. Sue Bishop, former Consul-General in Shanghai, spoke of the sensitivity relating to the cultural tradition of 'face' and that can often be a barrier to innovation and the generation of creative ideas as colleagues are unwilling to cause others or themselves to lose face.

The lively question time in the second half of the event included one compelling question put by a member of the audience, who asked "why, considering how huge the Chinese domestic market is, would a Chinese company want to expand overseas?" This generated a thought-provoking discussion from the panellists with answers ranging from the

• lure of greater margins overseas
• inferred superior quality from having global operations and selling products overseas
• the need to expand internationally due to the large captured share of the domestic market.

The panel included Sue Bishop, former Consul-General Shanghai 2003-2006,
Neil Blakeman, CEO Neil Blakeman Associates,
Benjamin Cheng, Principal Consultant, China Telecom (Europe) Ltd and Benjamin Schmittzehe, Schmittzehe & Partners China Advisory.
The session was chaired by Dr Kerry Brown, Senior Fellow of Chatham House and author of 'Friends & Enemies' (published summer 2009).

     

Click on the audio link below to hear for yourself some of what was discussed. A white paper on the topic produced by Schmittzehe & Partners is also available for download, see below.

Track: China Moving up the Value Chain Artist: Panel-led discussion

   

'Made in China'

  

The final event in this current series entitled 'China: Shifts in Consumption Patterns from Overseas to Domestic' will be held on Thursday 12 November at Chatham House. For more information click here or purchase your ticket online using the button below. Some membership discounts apply. (Price includes Googlecheckout fees of 3.4% and 20p per transaction)