Domestic success stories and overseas challenges
Amid the most severe economic downturn in decades, almost all of the big names in the international M&A arena are tightening their purse strings. China, however, continues its global spending spree. The huge wave of investment by Chinese enterprises in foreign-based firms reached US$20.5 billion in 2008, representing a hundred-fold jump over 2002 (US$200 million), and there is no end in sight.
While the deal making, such as Sinopec’s acquisition of Addax Petroleum for $7 billion, grabs the headlines, the post-deal integration is rarely covered. What typically happens after the deal is made? How successful is the post-deal integration? As the Chinese take their first steps toward creating global enterprises, it is worth looking at some of the lessons we can learn from their forays into both the domestic and overseas M&A arena.Some of their recent successes could be attributed to a number of factors, including the strategic importance placed on resources by the Chinese government, sufficient capital, technology and know-how, and the experience they have accumulated from previous failures and successes. And, this type of M&A also has one clear goal (to access resources). Once the resources are extracted, the job is done.
[This article has been reproduced with permission from IMD, a leading business school based in Switzerland. http://www.imd.org]