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With the evolution of Chinese enterprises overseas investment patterns over the next five years, the private sector is expected to become the main investment; M & A targets from large companies turn to SMEs, and to have the technology of the traditional European industrial manufacturing enterprise based; acquisition strategy also by holding the "strategy of "change, namely the minority stake owned by themselves establish a joint venture in China with the acquisition of domestic objects.
At the same time, Chinese enterprises overseas M also faces many challenges: not familiar with the process of international mergers and acquisitions, M & A expertise and lack of management talent abroad, it is difficult to overcome obstacles unfavorable international environment ...... Chinese enterprise's management team and decision-making must be clear that the success of overseas M & A business case must be sufficient premise to all stakeholders can accurately explain project plan or purpose of the transaction; must have the ability to be flexible and understand the rules of the global M & A transactions and timely change.
Chinese enterprises overseas investment patterns will change dramatically over the next five years. Recently, in, Intel China Investment Consulting Co., Ltd. jointly organized by the International Union merger (IMAP), China Investment Promotion Agency of the Ministry of Commerce to support the "2012 global cross-border M & A Summit", a report released InterChina case said.
InterChina recently to China 350 "moderate scale, financially sound, with professional and experienced international team representative firm intends to expand overseas through mergers and acquisitions" as the target of the survey, about 60% of the respondents there is a strong desire in overseas acquisitions or investments (Two years ago, only 15 percent of businesses optimistic about this growth model); 75% of respondents choose Europe or the United States as a major investment destination (two years ago,Most investors to Southeast Asia, Africa and Latin America as a major investment destination); and the EU intends to invest in Chinese companies in the US market, 90% of companies want the merger of industrial manufacturing companies (automobiles, machinery and spare parts), these European companies with its own technology, and more for the private sector (the respondents acquisition targets Chinese companies want "the best family business"), the turnover of less than € 200 million (Two years ago, more than 70 percent of Chinese investors want to make larger M & A activity).
Gradient investment patterns
Yang Hang, president of Intel China Investment Consulting Co., in an interview with this reporter, said that at present, the main Chinese enterprises to invest in cross-border mergers and acquisitions, investment and investment "appetite" are significant changes in the event, five years later, this trend will become more apparent.
IMAP was founded in 1973, is a medium-sized acquisitions in the global market (200 million - $ 500 million) to occupy a leading position in the international financial institutions, investment banking and other businesses in more than 40 countries and regions. According to the latest rankings released by Thomson Reuters, IMAP ranked global investment bank 10 before midsize market. And Intel China is the only member of the company in China.
Yang Hyong said that in the past, China's participation in cross-border mergers and acquisitions, mostly large state-owned body and sovereign wealth funds, which the influx of Latin America, Africa and Southeast Asia, but also to act "high profile." The purpose of the acquisition is the main access to resources, the areas covered by the oil, mining, agriculture, and investment volume. But now, the Chinese enterprises to participate in international mergers and acquisitions there were many new faces, and get involved in some new areas: its main force into large private enterprises,Also had to focus on medium-sized private companies operating in the domestic market, companies, small businesses just listed, of course, the beginning of yet the provincial state-owned enterprises. They lock acquisition targets more European markets, not only to develop the local market, but also in order to ensure their competitive advantage in the domestic market - buying technology "arm" themselves from abroad, and to create an international platform.
In addition, more concern is that Chinese companies looking for acquisition targets of large companies began to shift from small and medium-scale enterprises, and also began to try to "strategic acquisitions", that is a minority stake in a joint venture established by their own holding and acquisition targets in China business.
To attend the meeting of more than 200 Chinese companies mainly in medium-sized, including 80 per cent of companies are interested in European, American and Japanese markets, with heavy industry enterprises of acquisition targets; and only 20% of the participating companies in South America and Australia the mineral resources of interest darker.
Mergers and acquisitions, general manager of Intel China CHEN Jiangang director adds, the current potential acquisition target Chinese companies have chosen to European enterprises, followed by the US and Japanese companies. South America, relatively speaking, the risk in these areas is smaller acquisitions. "Like so Geely's acquisition of Volvo 'Tunxiang' acquisition of the general volume of cases, converting to reproduce in the future."
CHEN Jiangang also reminds us that although many Chinese industrial manufacturers optimistic about the synergies of the business acquisition targets among its domestic operations, mergers and acquisitions expected to enhance the competitive advantage, but "go out and bring back" such a development path in the long term does not apply to all enterprises, Chinese enterprises should look at the world, do not have to keep a close eye this single domestic market, "put all your eggs in one basket."
M to count is not high
Intel China's report also pointed out that Chinese companies have obvious advantages in cross-border mergers and acquisitions, but the disadvantage can not be avoided. Chinese enterprises need to better understand and adapt to Western countries dominated by commercial trading environment, thereby increasing the probability of success; to consider hiring a professional consultant to carry out a "unique combination" to compensate them with the cultural differences between Western companies.
Report that those who try to embark on the journey of Chinese multinational companies "have extraordinary vitality, power, energy, and passion", shareholders and managers of these Chinese companies eager to become "the world's new leader." Chinese enterprises are indeed occupy opportune: European and American economic downturn, while China nice view. These Chinese enterprises "is rooted in a stimulating domestic demand growing market," flourishing in the country, to support growth in the 10% to 20%, asset liquidity, and has the government. In addition, the RMB appreciation is expected 15% to 25% over the next decade, increasing the purchasing power of the currency.
But over time, Chinese enterprises transnational mergers and acquisitions has lost much less win, lackluster. Intel China, said statistics show that China-sponsored deal, more than 70 percent failed, and Western companies sponsored deal, the failure rate was 40%.
A few months ago, Intel China to target Western countries merging firms, investment banks and private equity firm conducted a survey, asking them for the high failure rate of mergers and acquisitions China's view: "I feel that Chinese investors sometimes do not pay attention to strategy . "(a European car parts business)," Chinese enterprises have some unrealistic ideas; an ambitious start possible, but eventually run out of steam, unwilling to risk ...... "(a European private equity group)" ...... some Chinese corporate decision-making process is not clear,And there have been new people to participate in decision-making in the past. "(A US chemical company)," Chinese companies rarely have the organizational structure to invest overseas, the team and the formal process, therefore, sometimes sudden change. "(A European country's state-owned assets management department)" So far, Chinese companies is difficult to win in the global M & A activity in the auction. They perform better in a separate transaction. "
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