The cost of going global for China's high-tech companies

Chinese high-tech and electronics companies are outgrowing the domestic market, improving their productivity, and forcefully defending the domestic consumer and corporate markets against foreign challengers. Despite reports that Chinese manufacturing has lost some of its shine to rising labor costs, analysis shows that its productivity in these technology sectors rose 11% a year from 2001-2006, outpacing labor cost increases of 10% a year. Scale has spurred productivity and helps Chinese companies to dominate the market in their homeland. However, to secure continued growth, companies must push into overseas markets, which require different skills and higher expenditures on marketing, research, and labor. While technology businesses are in the vanguard of China's foray into global markets, a company wishing to follow pioneers such as the computer maker Lenovo and the telecom giant Huawei must judge whether its operations and management capabilities are strong enough to absorb the shock of higher costs.