Being eaten by the dragon: Chinese takeovers

Article Type: Abstracts From: Strategic Direction, Volume 27, Issue 5

The Economist, November 2010, Vol. 397 No. 8708, Start page: 85, No. of pages: 3

Points to a number of factors that suggest that China will control the majority of foreign direct investment in the near future – its firms are among the world’s biggest, its firms and banks have surplus cash and deposits, and the Chinese government wants to have reliable sources of raw materials, build up its technical and commercial expertise and gain access to foreign markets. Based on interviews with executives of firms that have been bought by Chinese firms, discusses the reactions of western managers to Chinese businesses, Chinese business customs and the extent of state control of Chinese firms. Looks at the impact that these have on the negotiations before the acquisition, the price paid for the firm and its integration after the acquisition. Notes that often managers from the acquired firm leave the business fairly soon after the acquisition because they cannot fit in with Chinese business methods. Suggests that this damages the Chinese firms because they need western management expertise. Discusses the changes that would need to take place if Chinese firms were to maximise their performance. Article type:Viewpoint ISSN: 0013-0613 Reference: 40AA505

Keywords: China, Management attitudes, Management styles,Acquisitions and mergers