Joy and Pain, Giving and Taking. What Ails Chinese overseas acquisitions?

March 14, 2016

Today one of my essays  commenting on Chinese overseas acquisitions was published by CKGSB Knowledge.

 

On this topic, we have heard too much voice and opinions from both China and the Western world. Most of them were argued with each of their interests and perspectives. I cannot say they are wrong or not appropriate, but I do hope Chinese overseas acquisitions can and will be able to provide more value to the world's economy and global community, with benefits from the balance between seeking self-interest and behaving altruistically.

 

We have observed the overseas acquisition trend led by a group of great Chinese entrepreneurs with patriotism and altruism over the years. But still we see the pattern evolving from being questioned on the motivations for acquisitions to being challenged by acquisition strategies and consequences. There is no doubt, strategically, that Chinese overseas acquisitions over the past decades should have gone through the stage that was mainly focusing on resource-seeking, and then passing on to the stage focused on business model transformation (in addition to financial  purpose). However, practically, it seems this progress has been delayed when comparing it to the expected "Chinese speed".  I argue that the induced incompatibility (in terms of timing, space, and resources, with evaluating self and others) is the source of the pain of Chinese overseas acquisitions.  

 

Ideally, Chinese overseas acquisitions should not only be instrumental, but should also carry  more of a plan having the right starting, process, and sustained upgrading with right target, right timing, and at the right pace; but now we see it has not always been so, as what we expected. It shows this progress was constructed not patiently, not intelligently (enough), and not sustainably. The Chinese overseas acquiring cases were questioned by many as actions with special purposes, particularly it was commented upon as cases not having a good will, or ones that will be partially or fully paralyzed in the process. I have doubts, because this opinion might start from a disruptive view, and not always so objectively and fairly.  However, due to the issue of Chinese "face-gaining", I admitted that many of the Chinese overseas acquisitions were presented and acted upon differently.  

 

In this commentary essay, I commented on some common mistakes that Chinese acquirers always made (which I have to admit were also the common mistakes made by western fellow acquirers in the past). Considering more severe situations and the tough global market faced by Chinese entrepreneurs at this superior-inferior (superior in quantity but  inferior in quality) development stage (notes: most of the tough external situations cannot be visibly shown on the surface but can be indeed read by Chinese entrepreneurs), I wrote this piece with my hope that the following Chinese overseas acquisitions could be more efficient, sustainable, and with more meaningful hybrid (social and commercial) purposes in order to serve a larger world population. 

 

The truth is still valid: The new economic paradigm cannot be sustained without the disruptive contribution by Chinese firms. The transformation process of the world economy will be the same as the process of "Joy being upgraded by pain, taking being gained by giving, and success being powered by failing"! On Chinese overseas acquisitions, we do need to give them some space and time to fail and learn, but they should have a boundary.  And this strategic task primarily falls to the shoulders of government to structure the catching institutional environment and for education institutions to coach their development of capabilities.

 

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