As mentioned by British economist Peter Nolan in Is China Buying the World?, acquisitions and mergers are of vital importance for building up a global commercial system. At present, for Chinese enterprises, “going global” has already become an essential piece of the puzzle in the development of corporate strategy.
At the “Chinese Enterprise Competitiveness Forum: Enterprise Upgrading and Globalization” event concluded yesterday, Chief Executive China, the sponsor, joined hands with industrial experts, corporate executives and guests present at the event to explore the hot topics related to the overseas investment by Chinese enterprises. In particular, in the round-table dialogue link, Hu Bin, Director of the Global Trade and Financing Department of Hang Seng Bank (China) Limited and President of Shanghai Branch; Huang Chen, Vice President of Asian-Pacific Center of Ninebot Inc.; and Zhang Weihua, Deputy General Manager and General Counsel of the United Energy Group, shared their viewpoints on how Chinese enterprises are supposed to make their overseas deployment and manage acquired enterprises under the current economic situation.
Avoid “Eye Candy” Strategies
It’s true that overseas acquisitions and mergers can expand enterprise scale and develop the international market, realize technological upgrade and transformation, and strengthen resources integration draw lessons from the managerial experience of Western enterprises, and increase corporate competitive advantages in the overseas market. However, blind overseas deployment without adequate strategies is no doubt destructive for Chinese enterprises.
According to Zhang Weihua, it can be seen from the practice of numerous Chinese enterprises that, gratifyingly, Chinese enterprises have completed the transition from the “blind acquisition” in the past to the “rational acquisition” and “well-planned acquisition” at present. In fact, behind the “opportunistic acquisition” and “irrational acquisition” in the past, there was a blind decision-making on the part of enterprise managers. For instance, a leader would say something like, “This is Vernal Equinox today, and a fortune-teller has told me that this is the day for money making, so I’m going to take the project right now.” This is not a joke. In fact, it happened in many Chinese enterprises in the past. With the passage of time, managers of Chinese enterprises have shifted towards strategic considerations, and understood how to judge the emergence of the best acquisition and merger opportunities through following up related companies on a long-term basis.