Communiqué: The Bold Pace of China's Globalization

December 10, 2012
Communiqué: The Bold Pace of China's Globalization
2012 China Goes Global participants

Ash Center Hosts Wanda Group and Sixth Annual China Goes Global Conference

By Kate Hoagland – Communiqué: Fall 2012, Volume 11

Wanda Group Founder and Chairman Jianlin Wang spoke to a standing-room only crowd of students, faculty, and members of the Boston community in early September on the bold pace of China’s globalization. As a leading private enterprise in China with over $40 billion in assets in commercial real estate ventures, the Wanda Group most recently announced plans to invest over $10 billion in American enterprises over the next decade. This announcement comes on the heels of the Group’s already successful $2.6 billion acquisition of AMC Entertainment Holdings, creating the world’s largest cinema chain and marking the biggest cross-border acquisition by a privately-held Chinese company in history. “I think for the world, this is a landmark,” said Wang. “And for China, this acquisition means that the ‘go out’ strategy called for by the Chinese government is being reflected in private enterprises.”

Founded in 1988, the Wanda Group’s rise to become a leading player in commercial real estate, luxury hotels, tourism and cultural centers, department store chains, and information management has not always been easy. “I think the company’s expansion over the last 25 years is even more incredible given the suspicion with which the private sector has been viewed in China historically and even today in some quarters,” said Anthony Saich in his introductory remarks.

Under the Chinese Communist Party, private enterprises were monitored closely and restricted to having less than 10 employees up until the reform period of the 1980s. Since then, private sector companies have slowly and steadily been allowed to grow, but were blamed for funding the Tiananmen Square student protests in 1989. While far from a golden child today, private enterprises have come to be viewed as an important sector for increasing the country’s GDP, even though many complain that state-owned firms continue to be favored in bank lending and stock exchange listings. But the tide may be turning in favor of the private sector. In February of this year, China’s National Development and Reform Commission announced new guidelines to make it easier for private enterprises to invest abroad including tax incentives and credit support.

Companies like the Wanda Group have established a strategy of working “close to government, distant from politics” according to Wang. As the Wanda Group continues to enlarge its global footprint, working within the more secure legal structure and more mature market economy of the US may prove a welcome respite. Chairman Wang notes that in the AMC Theaters acquisition, “we have used existing local talents, information management, advanced technologies, and our own capital advantage while not imposing our own culture or talents.” And the strategy seems to be working: while AMC reported a loss of $100 million last year, this year it projects upwards of $20 million in profits all while only bringing over one Chinese employee to the US.

“There are plenty of investment opportunities from China which we should be encouraging, such as the latest Wanda Group acquisition” said Saich. “Many states are already courting Chinese investment irrespective of whatever the federal government says or does.”

China Goes Global
Encouraging such outward direct investment of globalized Chinese companies like the Wanda Group was a key topic at the sixth annual China Goes Global conference, held in early October. Convening leading thinkers from government, academic, nonprofit, and business sectors, the two-day conference included 16 panel discussions on a range of pertinent topics related to China’s globalization and its impact on the world such as Chinese global competitiveness, the impact of Chinese firms on global politics, and the role of the state in the globalization of Chinese companies.

China Goes Global was co-sponsored by the Ash Center, Harvard Kennedy School; the Center for International Business Education and Research, Georgia Institute of Technology; Jacobs University, Bremen, Germany; and the Crummer Graduate School of Business and Rollins China Center, Rollins College, Winter Park, Florida. The annual conference is part of a larger multidisciplinary initiative supporting transnational research on China’s globalization which has already resulted in the publication of China Rules: Globalization and Political Transformation (Palgrave McMillan, 2009) and special issues in the Chinese Management Studies Journal and the Thunderbird International Business Review.