Modern business must compete globally, and it is precisely this global reach that can sometimes lead to encountering markets with other languages, cultures, and business practices which can lead to problems.
Looking at the status of Chinese firms seeking to operate in Germany, we can see this problem in action.
Chinese foreign direct investment in Europe during 2016 increased 77% from 2015 levels to a total of EUR 35 billion, with Germany alone receiving 31% (EUR 11 billion).
While large-scale acquisitions grab headlines, such as Creat Group Corp. bidding for German blood plasma products maker Biotest for EUR 1.2 billion or Chinese appliance maker Midea’s EUR 4.4 billion purchase of German robotics firm Kuka, the overall scope of China’s buying spree in Germany, which is focused on high-tech companies, is, using 2016 numbers, more than total investments made in Germany for the last decade combined. Including these Chinese deals, 2016 witnessed a record number of German companies purchased – 873.
Naturally, this is worrying for many in Germany. To some, it appears that, by allowing foreign companies to freely invest in “non-direct military” sectors, Germany and, indeed, Europe, may be losing their technological advantage, leading many to subtly clamour for protectionist measures.
But there are also success stories, such as Putzmeister – the concrete pump maker was purchased in 2012 by a Chinese competitor and, instead of job losses, sales have grown by more than 30% since the takeover. Obviously, this growth didn’t happen by chance, and nobody turned a blind eye to meeting regulations and understanding restrictions.
Perhaps, the issue lies in communication, or, to be precise, the lack of it, just as KPMG’s September report Chinese A-share Companies: Outbound M&A identified the inability to understand cultural differences and the importance of effective communication as a key challenge for the successful post-M&A integration and management.
Though many aspects of business may be the same globally, the way in which it is conducted isn’t. For example, eye contact isn’t as important to the Chinese, and Germans may not understand the Chinese desire for frequent and lengthy meetings, often with a social aspect. If such simple etiquette can be misunderstood across cultures, there is also a high probability that more vital business communication could also be misunderstood, from different labour cultures to social responsibility issues.
Regardless of where a company’s headquarters is located, any company that has a better understanding of the locales where they do business is going to perform better. A business has to understand its customers as well as its stakeholders.
Rather than take the risk of a jarring misstep when attempting to grow your business internationally, it is always best to seek the guidance of an intermediary, a company who has the proven experience in translation, business communication, and cross-cultural communication.
EVS Translations, headquarter in Offenbach and with further offices across Germany, offers the entire range of Chinese business language services from a single source and can advise your company how to establish a two-way communication platform dedicated to all post-M&A integration activities and processes.