Chinese companies face culture shock in countries that aren’t like China

PHNOM PENH, Cambodia — Faced with slower growth at home and rising labor costs, Chinese entrepreneurs are seeking foreign markets as never before.

But as they rush abroad, they are grappling for the first time with unruly trade unions, independent courts and meddlesome journalists.

 And for many, navigating the unfamiliar waters of multiparty politics and confronting the power of public opinion makes for heavy going. As they venture into foreign democracies, many Chinese companies experience culture shock.

Having made their money in a one-party state, where political connections are the key to a successful business and the rule of law is easy to sidestep, they are finding things just aren’t as simple abroad.

 From the United States to Asia, Chinese entrepreneurs have a litany of complaints and have made a succession of costly mistakes. Even in tiny Cambodia, where China has become a major investor in the garment industry, they can sound bitter.

 “Trade unions are all the same: They are black-hearted,” complained He Enjia, president of the Textile Enterprise Association of the Chinese Chamber of Commerce in Cambodia.

 “In the last two years, things changed in Cambodia,” he added, explaining that factory owners used to be able to hire police to suppress striking workers.

“Now it’s impossible. The influence of the opposition party is growing, with the help of the Western media.”

By some measures, outward investment from China outpaced foreign investment into the country for the first time last year.

But abroad, where the public often demands greater transparency and courts enforce stricter environmental and labor laws, it is a steep learning curve for many Chinese companies, experts say, that mirrors the challenges foreign companies faced when they first entered China more than two decades ago.

 “If you look at foreign companies going into China, it was extremely difficult for them to adjust,” said Thilo Hanemann, who tracks global investment flows at the Rhodium Group, a New York-based economic advisory firm.

“Chinese companies are now going through the same thing, but it is even more complicated for them. The regulatory environment they grew up in is so vastly different than in markets overseas.”

washingtonpost.com