Indian and Chinese companies learning a lesson: Going International isn’t a snap
Babu Ghanta, Special Correspondent
January 12, 2005

Indian and Chinese companies have recently started venturing in the international markets though acquisition of companies in Europe and America. First the concept was the Western companies would with outsourcing contracts. Today the concept is not to wait for them to come, go and grab the contracts through the acquisition of local companies America and Europe. 

Recently, China’s Lenovo Group bought IBM’s PC unit. TCS of India bought companies in Europe and are eying companies in America. Most of the India’s BPO companies are venturing into South America, Europe, America and other countries with a hope to not only get business also get them executed in countries like Philippines and so on.

But when they branch out to other nations they are finding it is not so easy to manage business in the middle of other cultures. According to experts, Chinese companies keep the Chinese population separate from the locals. They learn things fast and try to do everything themselves. They have problems in outsourcing and getting things done. Indian companies think local workers in other countries are exactly like their Indian employees. They just cannot understand cultural differences that can offend people in other countries. 

Both Chinese and Indian companies operate under thrift and expect employees to be disciplined. The local communities regard these aspects as arrogance and stinginess. 

In America and Western Europe they find another problem. The local employees sometimes do not feel comfortable with styles of Indian and Chinese management. This causes lower productivity and conflicts of culture.

The biggest problem the Chinese and Indian companies are facing is failing to project their own employees as team players with the local employees in other countries.

There is another massive problem that comes from lack of confidence of the clients in the Western world. In Amsterdam, for example, a Dutch company feels extra comfortable knowing a Dutch company is involved in managing the outsourcing process. When that Dutch company is bought out by an Indian outsourcing giant, the clients do not feel that comfortable.

But in spite of all these. Indian and Chinese companies are using M&A (Merger and Acquisition) to expand into other countries. China is doing it to acquire energy assets and create Chinese manufactured goods markets in other countries. India is doing it to enhance the customer base as well as making sure reliable low cost energy supply is maintained.