To survive overseas, win customers.
To thrive overseas, win influence.
Every business encounters numerous challenges in new markets. Influential local allies are the key to overcoming many of them. As Google’s and Walmart’s troubles in China confirm, even a proven business model, ample funding and desirable offerings provide no guarantee that a new venture will survive, let alone thrive.
Expansion setbacks often occur because the newcomer fails to positively influence people able to obstruct the venture. After enjoying success in home markets, a company may underestimate the importance of persuading stakeholders that the benefits of its presence will outweigh the disadvantages.
MAPPING OUT YOUR STAKEHOLDERS
Stakeholders include anyone who is affected by your business transactions. One of the first tasks of a business in a new market is to identify and understand who your influential stakeholders actually are.
The most obvious stakeholders include national governments, regulators and policymakers, media organisations, investors, financial institutions and of course, customers. Then there are suppliers, business leaders and local government bodies who you must partner with.
Also important are NGOs. Environmental activists, labour organisations and consumer rights organisations are usually skilled at influencing public opinion and putting pressure on regulators and policymakers.
THE MECHANICS OF INFLUENCE
Every stakeholder can impact your business success either positively or negatively. As a newcomer you will face entrenched competitors who will relentlessly tell your stakeholders about any negative aspects of your presence.
Your opponents will seek to undermine key relationships with suppliers, distributors and investors. Vested interests will form lobby groups and pressure groups to work against you. Your opponents will apply their leverage over local media to generate hostile public opinion that can result in damaging regulatory decisions and poor consumer sentiment.
WHEN DEALS COLLAPSE
Acquiring a local competitor is a common tactic to gain a foothold in a new market. M&A is always a costly exercise. Even shopping for a local acquisition involves highly paid lawyers and bankers on both sides of the deal. It’s especially expensive, both in terms of cash and reputation, when a deal fails to complete.
A major Chinese telecommunications famously demonstrated the price of a failed acquisition when it attempted to engineer a widely publicised partnership deal with a large global rival. Regardless of the merits of the case, the company involved paid heavily for the exercise in prestige and assets. Despite wielding considerable influence in its markets, the Chinese company proved vulnerable to stakeholders not directly involved in its business.
HOW TO WIN FRIENDS AND NEW BUSINESSES
A lack of influence can lead to the collapse of key deals. Yet many multinationals master influence and smoothly achieve their aims. An example is Dalian Wanda Group, which became the world’s largest cinema operator by successfully persuading the stakeholders of US cinema chain AMC that the acquisition was in their interests.
Influence building begins by identifying and addressing the varying concerns of key stakeholders. In some markets Chinese companies are associated with dumping, environmental degradation, labour malpractice, questionable ethics and inferior quality. Steps must be taken to address any concerns that apply to your business. And be aware of concerns that don’t apply and disseminate facts and arguments to prove it.
COMMUNICATE CLEARLY AND OFTEN
Positive ideas about your presence in a new market need to be communicated early and forcefully. Launching your stakeholder management campaign well before you enter a foreign jurisdiction will give you time to carefully and delicately persuade influential stakeholders of your good intentions.
Those stakeholders need to be kept informed about positive progress on issues relevant to them via news and publicity campaigns. You must also develop and share a narrative of the opportunities and advantages you bring to the society you are entering.
GO WHERE LEADERS GO
Chinese companies expanding overseas will benefit from developing and supporting initiatives that involve influential senior leaders. Many are willing to engage with ambitious Chinese multinationals because they too desire influence. They also recognize the reality of global trade and seek to engage with promising newcomers on neutral terms.
Encouraging and leading public debate about issues of concern and offering potential solutions will inspire support for your cause. Skilfully implemented initiatives that reach senior leaders will help to build or restore corporate reputations, overcome negative perceptions and facilitate business growth.
YOU CAN GAIN EXPOSURE TO MANY OF THE WORLD’S MOST INFLUENTIAL LEADERS THROUGH A GOING GLOBAL CAMPAIGN.
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