Tech multinationals cannot afford to take their eyes off the road in China

Unrelenting geopolitical tensions make business and communications even more challenging than usual. That is all the more reason to invest in getting them right.

In the ever-changing landscape of global business, China remains a strategic hub for multinational tech companies despite challenges on both the business and communications fronts. There is still a compelling case for sustained investment in the Chinese market: Despite the hurdles of ongoing geopolitical tensions and communication complexities, the opportunities for growth and collaboration remain unparalleled.

Tech sector challenges

Multinational tech companies operating in China, particularly in the semiconductor space, are grappling to varying degrees with geopolitical issues and restrictions. From a business perspective, the landscape is evolving as China’s strengths now extend beyond low labor costs to encompass a robust supply chain, logistics, skilled labor force, manufacturing capabilities and innovation. The challenge lies in reevaluating global business models to incorporate China effectively, with considerations such as the “China + X” approach gaining prominence.

Car driving down road
Chinese carmaker BYD sold more electric vehicles than Tesla in Q4 2023 (Shutterstock)

On the communications front, the definition of what is “local” is undergoing transformation, encompassing cultural and political nuances. The perception gap between local teams and global headquarters is deepening, influenced by factors such as historical legacy, the role of media and policies of other countries. This requires delicate navigation of China-based narratives and messaging. Changing consumer behavior — where consumers are more selective, value quality and rely heavily on online reviews and ratings to make purchasing decisions — and the need to choose sides in a global context add further complexity, making effective communication strategies crucial for success. For foreign tech and B2B brands operating in China, this means understanding and adapting to the unique preferences and priorities of Chinese customers.

Alongside these changes, the persistent war for talent across industries underscores the importance of assembling the right teams for success. Organizations are increasingly recognizing that impactful internal communications play a pivotal role in fostering a positive employee experience. As the competition for skilled professionals intensifies, creating an environment where employees feel engaged and valued is paramount.

Opportunities amid restrictions

Despite limits on access to advanced semiconductor manufacturing equipment, non-US-based multinationals continue to find exciting opportunities in China’s thriving market driven by government-led incentives and industry investments. The country’s position as the leading manufacturer and exporter of electronics underscores the significance of technology and equipment collaborations. Companies such as ASML, Infineon and Synopsys have seen substantial contributions from their Chinese operations, emphasizing the value of striking the right pitch in the world’s second-largest economy.

Another industry experiencing rapid growth is China’s new energy vehicle (NEV) market. In 2022 alone, China accounted for nearly 60% of global electric vehicle (EV) sales, and local carmaker BYD sold more electric vehicles than Tesla in Q4 2023. In a move to transition the local economy to one that is driven by high-tech manufacturing and consumption, the Chinese government has channeled resources into the EV industry in the form of consumer subsidies, tax rebates and government fleet purchases.

The path to success

China is unique in various aspects, including its legal system, cultural differences and business environment. Navigating operations in China demands a nuanced approach and a deep understanding of the market intricacies. To succeed, multinationals need to:

Create a messaging bank tailored to the Chinese market

While it is essential for companies to seek local support in managing these different aspects of doing business in China, it is just as important to develop a comprehensive messaging bank aligned with local expectations. This repository should address sensitive topics regarding data storage, local client support and R&D locations. By aligning messaging from both global and local teams, companies can ensure consistency and clarity in communications. Appointing a local spokesperson who understands the market and its unique requirements is also essential as they can effectively address local customer needs and convey Chinese-specific messaging that factors in both linguistic and cultural nuances.

Safeguard narratives to comply with China’s guidelines

Conducting a thorough review of all website content and press materials to ensure compliance against China’s political sensitivities will be imperative. In contrast to practices that are almost expected in foreign markets, expressing political opinions or taking a strong stance on an issue is not advisable for businesses operating within China. This means avoiding sensitive topics while reflecting their commitment to the Chinese market. More specifically, organizations must ensure there are no mistakes regarding the One China policy, including the correct usage of terms such as “China,” “Mainland China,” “Hong Kong,” “Macau,” and “Taiwan.” To avoid political controversies, verifying the accuracy of maps and flags will also be crucial.

Activate multichannel reach and exposure

In a market where the presence of traditional print media is dwindling and attention spans are shortening, foreign companies entering China must leverage new digital channels and adopt an integrated communications approach. Preferences for information dissemination and consumer engagement have shifted to a myriad of media platforms and super apps. To reach the Chinese audience, a corporate WeChat account is an entry-level necessity. Social media platforms such as Douyin and Xiaohongshu, where bite-sized content is popular, are additional ways for companies to engage and interact with the younger generation.

Align with the government’s agenda

Western media coverage often paints a different picture than what is happening on the ground in China. Changes in strategy and agenda may occur subtly without public media reporting. It is always worth consulting local partners to identify priorities and necessary steps to align with the government’s direction. Foreign companies should actively engage with government officials, agencies and industry associations to strengthen relationships and foster open dialogue. A willingness to learn and work toward understanding China’s regulations will go a long way. Companies like ASML demonstrate transparency in their reporting of China sales growth, while BASF conveys strong China-centric messages, showing a good balance in their communications approach of advancing global initiatives within a local context

Invest in communications for the long term

Despite difficulties, investing in China remains critical due to its scale and political stability. China’s importance to multinational tech companies transcends its challenges, presenting a landscape ripe with opportunities for growth, collaboration and long-term success. A robust communications strategy tailored to the Chinese market can establish a strong rapport with both local consumers and the government. Companies that actively commit to understanding and aligning with the local media landscape will position themselves ahead of the competition.

Ultimately, demonstrating commitment to the market sets a standard for adaptability and cultural sensitivity. Conversely, those neglecting this effort risk falling behind and missing the chance to build strategic advantages in the Chinese market.

To find out more about how we can support your China strategy, get in touch at [email protected].

You May Also Like

New leadership signals new — but unpredictable — opportunity for Indonesia’s tech sector 

Maureen Tseng and Niko Radityo offer tips for tech companies looking to build their brand in Indonesia and explore how policy and regulation changes impact the communications landscape.

Photo of bright Indonesian skyline at night

Why should diversity and inclusion be at the heart of every organization?

Constance Falourd discusses the crucial importance of embracing diversity and the plethora of benefits it offers to organizations.

Hands of diverse skin tones forming a heart