Key lessons China Inc is learning on the Belt and Road

Building a mosque close to a factory is one example of the many ways Chinese firms are working within partner countries to smooth over some of the bumps on the Belt and Road.

After acquiring a 49.9% stake in Malaysia’s national carmaker, Proton, in June last year, Zhejiang Geely Holdings noticed that productivity at its main plant was down compared with its other overseas plants such as its Volvo plant in Europe.

When management investigated, they discovered that the majority of the workers were spending several hours per day travelling to the nearest mosque to pray.

“After we discovered the nearest mosque was several kilometres away, and nearly all of our staff were having to travel for hours each day to pray, we decided to build a mosque closer to the plant,” said Li Shufu, chairman of Zhejiang Geely Holding through an interpreter at Thursday's Hong Kong Trade Development Council Belt and Road Summit. 

That was just one of the examples given at the summit to show how Chinese companies are adapting as they spread their wings under the Belt and Road Initiative. As more companies seek deals in Southeast Asia, China Inc will either have to learn to assimilate with local conditions — from working culture to regulatory environment — or try to adapt companies to the Chinese way of doing things.

Participants at the summit set out a few of the regulatory and cultural hurdles they have had to cross.

Shinta Widjaja Kamdani, chief executive officer of Sintesa Group Indonesia and vice chairman of the Indonesian Chamber of Commerce and Industry in Jakarta, explained why the initiative had started relatively slowly in her country. 

“For foreign investors, the regulatory regime causes problems. Even if you gain a licence from the central government, you still have to gain approval from the regional government” she said. “This can cause delays that put potential investors off.”

Culturally, the suspicion that working with Chinese partners imposes onerous conditions on the local populace and industry was also a keen consideration for Kamdani.

“When the Chinese are working, there are certain requirements that they also expect. First, is the use of Chinese technology in the projects and, second, manpower. Chinese companies want to bring their own workers,” Kamdani said.

She went on to say that Indonesia certainly lacked the numbers of skilled workers required for such massive projects and that Chinese companies should remember the importance of training local workers when pitching for projects.

Frederic Ma Si-hang, chairman of public transport operator MTR Corporation Hong Kong, was only too happy to take the baton. The company, which runs Hong Kong's railway network, has expanded rapidly by taking on contracts to operate railways overseas.

"We have established the MTR Academy in 2016 to train railway executives in the region and over 100 executives have been trained so far, from countries including Indonesia, Thailand, Malaysia and the Philippines" he said.

These are critical points for potential infrastructure investors across Southeast Asia and they show that empathy for the economic and cultural interests on the ground and local partnerships can smooth over some of the bumps facing Chinese firms as they expand further and further from their home base.

In particular, employing and engaging local people in projects at the earliest opportunity will help to overcome many of the obstacles that could arise on some of these mega-projects, the summit heard.

“Collaboration, mutual respect and understanding the country’s culture are important to make the belt and road projects a success,” said Zhejiang Geely chairman Li Shifu in conclusion.

So be on the look-out for seemingly unrelated projects being built alongside that shiny new railway.

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