Chinese companies are no longer interested in only U.S. cash and technology, they now want to partner with Georgia private equity investors to learn from them, according to Guanming Fang, attorney with Womble Carlyle Sandridge & Rice PLLC in Atlanta.
The Chinese business community is developing so rapidly that even in the last 12 months Ms. Fang has seen this shift in China, she said during an MIT Enterprise Forum conference on doing business in China May 15.
“Our natural reaction was that Chinese firms are looking for U.S. money, but they told us that they already have money. They are now looking to partner with U.S. private equity investors to learn their management methods, how to make investment decisions and how to evaluate potential investment targets,” Ms. Fang said of a recent meeting with a Chinese private equity firm.
Chinese companies want to learn U.S. business processes and branding strategies, as well as other “intangible assets,” she told GlobalAtlanta.
Also in the past year, China’s service industry has developed dramatically, Ms. Fang added.
In addition to an increase in U.S. attorneys and accountants flocking to China, capital service companies are also seeking opportunities there, as well as insurance firms, logistics service providers, business consulting firms and private equity firms, she said.
Ms. Fang said that she has various clients discussing partnerships with Chinese firms, and some have made formal arrangements. But Georgia companies must be cautious in choosing the right Chinese partner, she added.
She also said that this is even more critical in the services sector than in manufacturing because there are typically fewer tangible measurements to evaluate a Chinese service provider’s credibility.
A Georgia company can measure a Chinese manufacturing firm’s eligibility as a partner by the quality of its products and distribution channels, she said.
There is risk involved, of course, in trusting that the Chinese manufacturer will respect intellectual property rights and pay on time. But a Chinese service company carries those risks, plus fewer tangible measures to judge its quality, Ms. Fang explained.
A lack of transparency in Chinese company operations, with not much financial or corporate information available to evaluate them, makes for a riskier partnership, she said.
“But I personally think that China is really moving on to the second stage of economic development. Its service sector is expanding, and demand for services is growing,” Ms. Fang said.
Accordingly, Chinese business people are learning business management skills. Ms. Fang said she is seeing more Chinese attending executive MBA programs in China.
Chinese companies are also increasingly sending executive students to the United States to learn management skills. Kennesaw State University, for example, has brought more than one Chinese executive MBA program to Atlanta in the past year, in addition to its training programs for Chinese government officials, Ms. Fang noted. Womble Carlyle attorneys met with an executive MBA group that came here from Wuhan, China, last September.
“They are getting out of their country to learn. Chinese service companies are partnering with American companies, and they are looking for further partnership opportunities with U.S. counterparts,” she said.
This maturing of the Chinese business community should not be perceived as threatening. Rather, it creates opportunities for Georgia companies, Ms. Fang said.
While more Chinese capital services companies are interested in the U.S. market, for them to come here and start operations on their own is difficult. So, they want to partner with professionals who know market, thus creating opportunities for U.S. firms, she said.
The situation of Chinese companies learning U.S. business management skills and then immediately coming to the U.S. market to compete with American firms is a “long, long shot in my view,” Ms. Fang said. She noted that after some 20 years of the growth of Chinese manufacturing, those firms still have not come to the U.S. in droves.
“Developing a business in China is very different than growing one in the U.S.,” Ms. Fang said.
Womble Carlyle has been working with Chinese firms interested in partnering with Georgia companies. The company hosted a May 10 dinner reception at the Metro Atlanta Chamber of Commerce for a delegation representing China’s soybean, cotton, household products and investment sectors that included General Protecht Group, a Chinese manufacturer that announced a $30 million investment in Barnesville.
Ms. Fang said Womble Carlyle hosted the reception here because the firm met some of the delegates during a business mission to Beijing in March. Womble Carlyle is not legal counsel to General Protecht.
Ms. Fang spoke on a panel at the MIT Enterprise Forum event with China Research Center Director Penelope Prime and Georgia Tech International Affairs Professor Fei-ling Wang. Suresh Sharma, CEO of JS3 Global and former executive director of India, China and America Institute.
Jagdish Sheth, marketing professor at Emory University’s Goizueta Business School, and Wilson Liu, CEO of Amerasia, gave keynote addresses.
Story Contacts, Links and Related Stories
Womble Carlyle Sandridge & Rice PLLC – Guanming Fang (404) 879-2444
Ms. Fang’s blog on the firm’s March business mission to China
GlobalAtlanta Article: General Protecht’s investment in Barnesville.