Huawei and ZTE, two leading Chinese communication equipment producers, were caught out by a report from the United States House of Representatives, warning the two enterprises may be a threat to national security in the US.

The two enterprises' recent financial reports indicate both of them saw considerable drops in profit year-on-year. The enterprises should think carefully about the difficulties they are confronting, draw lessons from past experiences in overseas expansion, and work on developing rational global development strategies.

Market environments and man-made obstacles are two common pitfalls that can befall Chinese enterprises when they enter the international arena, and should be properly dealt with.

A stable market may suddenly become full of uncertainties and risk after a political crisis in the region. And the artificial resistance from the target countries, in the form of legal disputes and biased investigation reports issued by local authorities or third party researchers, should also be anticipated.

These two factors are not common in the domestic market in China. So Chinese enterprises do not have the experience to anticipate them in advance or deal with them in a timely manner, which often causes heavy losses and unexpected failure for the enterprises' early investments.

After the two enterprises become the main patent holders in their field, national security replaces intellectual property rights protection as the biggest challenge. So Chinese enterprises should prepare to deal with problems as they occur — there is no once-and-for-all solution. They should improve their understanding of overseas markets and be prepared for problems that may arise in the long-term.

This does not mean that they should learn how to swim before jumping into the water. Instead, they should develop their knowledge as quickly as possible in foreign markets. After all, learning to swim is easier in the water than on the land.

Translated from China Business News