Succeeding as  a Multinational Corporation in China

​By Gibson Haynes
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On Thursday, Nov. 5th, NexGen Global Forum fellows met with Leon Wang, President of AstraZeneca China and Hong Kong. Detailing his long involvement in multinational corporations, he described the strategies that, in his experience, can help such corporations thrive in China’s often perplexing business sector.
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Engaging with the local government: Restrictions are a fact of life for multinational corporations operating in China, but developing a habit of frequent, positive communication with local regulators and governments can prevent a corporation from running afoul of regulatory restrictions. In China’s atmosphere of increasingly institutionalized regulatory frameworks, old rules and modes of operation are rapidly changing, so corporate practices must be equally nimble to stay abreast of legal developments. The multinational nature of companies can also negatively affect local governments’ perceptions of those companies; for example, frequent use of tax loopholes and complex financial structures to move money out of China understandably displeases local government officials, whose programs are supported by tax revenue. Another common perception issue is that multinational corporations enter Chinese markets in order to ‘take advantage’ of them; hiring and promoting Chinese talent, on the other hand, indicates genuine desire to integrate with the local business environment.

张涵奇 供稿

​11月5日，青思智库全体成员迎来了阿斯利康中国及香港总裁王磊，与我们分享他对跨国企业的独到见解。王总同大家讲授了跨国企业在国内如何调整战略以应对复杂的商业环境中的机遇和挑战。

首先是如何同地方政府合作。跨国企业在中国必然需要适应新的规则约束，不过此时重要的是与地方政府的积极沟通，从而更合理、稳妥地作出调整。企业要做到与时俱进，不断自我提升和调整以适应中国不断更新完善的法制体系和操作流程。企业的跨国身份在其与地方政府接触的过程中并不一定是个优势，鉴于此，企业应该树立本地化意识，重视本土人才的雇用和培养，淡化自己的外企身份。

Engaging with the local economy: In addition to hiring local talent, Mr. Wang spoke highly of the ability of local companies to produce complementary and intermediate products to the advantage of the MNC. Developing good working relationships with local suppliers builds a corporation’s crucially important reputation while integrating it into local supply chains. For AstraZeneca China, this has meant a shift from caring solely about pharmaceuticals research and production to a “3D” strategy of digital, devices, and diagnoses. Digital medicine apps and practices offer unparalled growth potential, and medical device partnerships allow for the promotion of complementary treatment options. At the same time, these smaller companies also benefit from AstraZeneca’s experience, name brand, and market share.

Engaging with the local community: Local companies have more than purely logistical benefits to offer, however. Many multinational corporations find it most advantageous to begin operations in one of China’s many special economic zones (SEZs), where certain legal restrictions are relaxed and other incentives are offered. Many domestic firms also take advantage of these offers, and Mr. Wang pointed to the environment of ambition and aspiration that is engendered by so many forward-looking companies all sharing a close geographical space. Convening groups of local companies to talk with one another about their research and methods creates a rising-tide effect, where multinationals’ experience with best practices and local firms’ energy can promote productivity across the whole zone.

Understanding local markets: A key component to success in China and throughout Asian markets is an abiding understanding that local market needs may not match those of other areas in a multinational corporation’s purview. For example, the medical maladies faced most often in China are quite different from those encountered in the United States; these differences in epidemiology can be a function of genetic, environmental, dietary, or social differences. AstraZeneca China’s focus on ‘translational science’ is just such a tactic, aiming to address health concerns like liver, lung, and gastric cancers which occur much more commonly in China than elsewhere. By focusing research in these areas, the products AstraZeneca develops will be guaranteed to meet a local demand and (considering China’s population) will have a high sales potential. An understanding of patient practices in China also contributes to the company’s strategy – for example, patient compliance with extended treatment regimens is lower in China than in other markets, so AstraZeneca gets more benefits from medicines to treat acute diseases in China than it does in America, where chronic treatments are the money-makers.

Innovating: Of course, the creation of new products is fundamentally important for succeeding in the China market. Tremendous financial and ideological resources are being channeled into the promotion of Chinese innovation, so multinational corporations that promote indigenous research are viewed as favorable partners in this mission. For AstraZeneca, this is most tangibly demonstrated by the research facility in the Shanghai Free Trade Zone, where their first compound discovered in China has been added to the company’s production pipeline.  However, innovations are not confined solely to products sold; expanding to markets previously ignored can offer substantial rewards. Rather than focusing solely on the “30 cities” – provincial capitals and metropoli like Beijing, Shanghai, and Guangzhou, forward-looking corporations can conceive of the “300 cities,” encompassing many more of China’s rapidly developing interior and peripheral areas,  and serve a much wider swath of the country.
In China, it seems, the watchwords are local and new. 

其次是如何融入本土经济体。除了人才战略，王总还强调了与本土企业的合作。本土供应商能够与跨国公司形成良性互补，提供互补产品或是半成品，最终形成完善的供应链。阿斯利康的3D战略便是最佳实例。阿斯利康贯彻了互联网（Digital）、器械（Devices）、诊断（Diagnoses）的“3D创新方针”，该方针的实施离不开与本土企业的共赢合作。

第三是如何融入社区共同体。跨国企业应该充分利用经济特区这一地理资源，与同区域的国内外企业合作。本土企业不仅仅具有物质优势，更重要的是大多本土企业十分具有前瞻性和活力。企业间交流互动可以促进互相学习进步，从而提高生产力。

第四是如何理解本土市场。对于药企来说同样存在水土不服的情况，如何理解国与国之间的环境、饮食习惯、社会、人种基因的区别对于药企来说至关重要。阿斯利康在中国对于例如肝癌、肺癌、胃癌的等高发疾病的关注即是因为考虑到了这些流行病学因素。如此一来，企业才能有的放矢地进行科研，提供契合市场需求的产品。除此之外，中国患者和美国的患者之间对待长期治疗的态度差异也导致了急性疾病和慢性疾病药物在两地表现有所不同。这些都是跨国药企需要考虑的因素。

​第五是如何做好创新。创新毋庸置疑是成功的关键。中国当前的政策环境和思想氛围为创新研究提供了极佳的条件。阿斯利康在上海自贸区设有研究设施，并成功将当地的研究发现投入生产。当然，产品线只是创新的一部分，市场的开拓创新也能令企业受益。跨国企业的视野正从中国的30多个省会和大城市向外扩展，在更多的地方发现商机。
王磊总裁的独到见解将重点放在本土化和创新这两个关键词上，对于所有在中国的跨国企业极具实际的意义和启发性。