Learning from Dragons who are Learning from Us: Developmental Lessons from China’s Global Companies MARY B. TEAGARDEN DONG HONG CAI Let her sleep. When the dragon awakes, the world will tremble... W hen Napoleon Bonaparte made this statement he may well have been envisioning the global economy in the 21st century. Since China opened its doors to the West thirty years ago, there has been a dramatic change in China’s economic fortune. The evolution of Chinese businesses from closed door iso- lation to internationalization, and even global integra- tion for some, has been dramatic and swift. As these firms matured, there have been major shifts in corpo- rate strategy, technology management, and human resource and talent management practices, especially among globally competitive, leading edge Chinese firms. Americans and Europeans are beginning to notice, and even fear, Chinese multinationals. They have come to our attention primarily through high visibility media coverage of Haier’s bid to acquire Maytag, CNOOC’s bid to acquire Unocal, and Lenovo’s success- ful acquisition of IBMs’ computer business. This visi- bility is the tip of the iceberg regarding aggressive Chinese acquisitions of foreign companies, 62 percent of which are in Asia. Chinese energy companies have bought controlling stakes in oil fields from Indonesia to Sudan; China’s largest steel-maker, Baoshan Iron and Steel, has bought into iron ore mines in Brazil to ensure reliable supply, and is part of a consortium seeking control of Canada’s largest mining firm, Noranda. Acquisitions are one of many paths taken by Chinese multina- tionals’ as they grow toward global dominance in their industries. There is no doubt: the dragon has awa- kened. Conventional wisdom suggests that there are three principal reasons for Chinese companies to expand abroad.  Secure natural resources to meet high home demand for raw materials and fuel  Identify and secure foreign technology and know-how  Escape home market saturation and ruthless price wars In this article, we examine the second and third drivers as we seek to understand key success factors for Chinese manufacturers serving global mar- kets. Twenty years ago, scholars and practitioners alike were forecasting that despite a strong desire to do so, Chinese companies would not join the ranks of the industrial mighty by this millennium. They were too pessimistic. Today there are credible examples of Chinese multinationals among the industrial mighty in industries as diverse as information technology, consumer electronics, telecommunications, white goods, steel, oil and gas, and banking. While these companies might not be household names, we are surrounded by their computers, refrigerators, and televisions. They carry unfamiliar names like Haier, Lenovo, Huawei, TCL, UTStarcom, Galanz, Pearl River Piano, Chonghong, Ningbo Bird, Kelon, Baosteel, CNOOC and Sinopec. They also have proven to be formidable competitors in their indus- tries. We focus our discussion on four Chinese manufac- turers that have successfully globalized. Specifically, we describe the business evolution and drivers of changes in the management practices of Haier, Hua- wei, Lenovo and TCL. These vanguard companies, pro- filed below, followed a common evolutionary path to success. 1 We are intrigued with the future challenges these companies will face and what must be done to address them. Our conclusions focus on the solutions and key success factors that other globalizing compa- nies can emulate. Organizational Dynamics, Vol. 38, No. 1, pp. 73–81, 2009 ISSN 0090-2616/$ – see frontmatter ß 2008 Elsevier Inc. All rights reserved. doi:10.1016/j.orgdyn.2008.10.001 www.elsevier.com/locate/orgdyn 1 Full versions of these research case studies are available from the authors. We have synthesized key case facts for this manuscript. 73