Localization is path to success in Europe

A European employee of Huawei Technologies Co Ltd introduces the company at a tech expo held in Zagreb, capital of Croatia, in August. The company opened its first office in the United Kingdom in 2001 and now has 15 offices across the country. [Photo/Xinhua]

For Chinese companies that operate in Europe, localization (hiring local employees, localizing products and services, complying with local regulations and understanding local culture) is crucial for success.

As every market is unique, it is essential to be open to understanding the specifics of each market.

The European market is relatively mature, competitive and complex, quite different from domestic markets, so localization brings Chinese companies a better understanding of local requirements and better customer relationships.

And localization can be a beneficial strategy for all aspects of brand-building, especially for a newcomer from China.

In many European countries, legal and regulatory frameworks require Chinese corporations to employ local workers. Chinese investment and hiring in these countries have been beneficial for local jobs and the economy.

Local employees also have a better intrinsic understanding of local product requirements, not least because they can communicate directly with their European customers.

A successful example is Huawei Technologies Co Ltd, an information and communications equipment provider. The company opened its first office in the United Kingdom in 2001 and now has 15 offices across the country and 890 employees.

More than 70 percent of Huawei employees there are local recruits. More importantly, most of the members of the top management team are local. Huawei will continue to expand its investment in the UK in the coming years and plans to have 1,500 staff by 2017.

Besides hiring, and localizing its products and services, the company's research and development center in the UK will deepen relationships with local customers.

Particularly in the UK, with its advantage in providing innovative and customized products and services, Huawei works closely with local telecommunication operators such as BT Group Plc and universities.

In November, Huawei announced that it would donate $6.3 million to the University of Surrey for research into creating a fifth-generation wireless network. The funding is part of its ambitious $6 billion investment in 5G communications technology.

In September, Huawei acquired Cambridge-based Internet of Things business Neul for $25 million.

Counting on local resources has built a solid relationship with the local community and earned wider recognition. Huawei was named the Best Chinese Investor of the Year in the British Business Awards 2014 on Nov 20.

Localization of management practices, including compliance with local regulations and understanding local culture, can also build good images of Chinese companies.

Several years ago, Chinese investments in Germany caused some concern, and there was talk of a "Chinese invasion". In recent years, however, more Germans have discovered that Chinese companies operate well locally, follow legal requirements and respect German culture.

For example, at Sany Germany, the local arm of machinery producer Sany Heavy Industry Co Ltd, more than half of the workforce used to be Chinese. Now, 80 percent are European.

The company's operational management team is entirely European, and it does business in a European way, fully compliant with all legal, ethical and cultural requirements and customer expectations.

The European market is especially demanding in terms of legal requirements as well as customer expectations for product reliability, durability and flexibility, and after-sales support.

It is quite evident that more Chinese companies are going global and seeking a strong foothold in Europe. But they all need to be familiar with local regulations and policies, understand local cultural traditions and customs, deal with local government agencies and people and reflect public opinion.

Without understanding and addressing these issues, any venture into the European market will be a short and unsuccessful one.