What core challenges will Chinese companies face when going overseas?

In the trend of economic globalization, many Chinese companies are full of expectations for the global market, attempting to cross national borders through their overseas business. However, with it comes various challenges and dilemmas for enterprises to go overseas. Experts from Acloud pointed out that the core challenges faced by Chinese enterprises when going global include changes and uncertainties in the political environment, collisions between culture and customs, fluctuations in the global macro environment, their core competitiveness, and the demand for international talent. Therefore, when Chinese companies seek overseas opportunities, they will encounter more uncertainty and complexity. To address these challenges, relying solely on self growth is not enough. Higher levels of international cooperation, risk management strategies, and forward-looking thinking are needed.

What core challenges Chinese enterprises face when going abroad

Chinese companies typically face multiple challenges when expanding their business or market overseas. This includes cultural differences, legal and compliance, brand awareness, talent challenges, supply chain issues, market research and strategic positioning, competitors and market structure, technology and product adaptability, political and economic risks, exchange rate risks, intellectual property protection, etc. For example, legal and compliance challenges, as well as supply chain challenges, have become the first and foremost challenges for enterprises going overseas. Each country or region has its own specific laws and regulations, and overseas enterprises need to fully understand and comply with them, especially tax, labor law, antitrust law, etc.

At the same time, laws and regulations are constantly changing in different countries and regions due to various factors. Overseas enterprises must comply with the changes in the enterprise, otherwise once they encounter laws and regulations, it will directly have a serious impact on the operation of the enterprise. For example, in terms of supply chain challenges, enterprises may face a series of difficulties in building and maintaining supply chains in new countries and regions, especially in integrating with existing supply chains. Once the supply chain is unstable, it will lead to default and reputation risks.

What do experts think of the challenges faced by Chinese enterprises going overseas?

Deloitte Management Consulting, a Chinese expert, once summarized in “New Journey: Rethinking the Internationalization of Chinese Enterprises” that in the new stage of “going global”, Chinese overseas enterprises face key challenges in market selection, business development, organizational control, and other aspects.

For example, market uncertainty: due to geopolitical tensions and changes in economic and monetary policies, it is difficult to grasp the development situation of various countries, exacerbating the difficulty for Chinese companies to choose overseas markets when going abroad; Difficulty in promoting business: Lack of understanding of local consumers, competitors, and partners, lack of localized resources, and difficulty in developing effective business strategies and promoting implementation; Organizational difficulty in control: Due to geographical factors, cultural differences, and other limitations, Chinese enterprises find it difficult to achieve effective organizational control over overseas business.

How to crack the challenge of Chinese enterprises going overseas?

Since Chinese companies face so many core challenges when going overseas, how can our overseas companies overcome common pain points? Nowadays, more and more global overseas enterprises have adopted SAP’s enterprise overseas solutions. For example, the SAP S/4HANA Cloud provides a series of tools for our overseas enterprises to help them address challenges in global supply chain, risk and compliance management, talent management, and marketing. Firstly, SAP S/4HANA Cloud (ERP Cloud) has created a global digital infrastructure platform for overseas enterprises, achieving comprehensive integration of people, finance, logistics, and carbon emissions. Covering five major digital operational solutions, including global compliance risk control, global industry chain collaboration, global talent management, global sustainable development, and global marketing management, we help enterprises cope with various challenges they face when going overseas. SAP S/4HANA Cloud (ERP Cloud) provides a one-stop cloud solution for overseas enterprises, ensuring smooth operation and efficient growth of their business no matter where they are in the world.

Taking the global compliance risk control solution that everyone is most concerned about as an example, SAP S/4HANA Cloud mainly provides cross-border transaction planning, execution, and management for overseas enterprises through global trade services; Risk and compliance management to ensure the legality and compliance of overseas enterprises operating in various countries; Transaction and Reporting Compliance: Ensure the compliance of financial transactions and ensure the authenticity and accuracy of financial statements.

How can globalization solutions help?

In summary, although Chinese overseas enterprises have encountered various difficulties in the process of globalization, by introducing advanced globalization solutions, strengthening their core competitiveness, deepening international cooperation, and strict risk management, our overseas enterprises still have the opportunity to seize the opportunities in the global market.

To further understand the in-depth challenges of enterprise going overseas and enterprise globalization, as well as how to transform and solve them through SAP S/4HANA Cloud digital means, click on the link here for more information and professional advice.

This article "What core challenges will Chinese companies face when going overseas?" by AcloudEAR. We focus on business applications such as cloud ERP.

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