BIZCHINA> Review & Analysis
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BIZCHINA> Review & Analysis
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China not in search of money or power
By Yang Ning (China Daily)
Updated: 2009-11-26 07:50 Studies show that the "failure" rate of Chinese companies in their overseas M&A (mergers and acquisitions) bid reached 67 percent in the past two decades. This could mean that more than half of the investment money has evaporated. But He says the figures don't speak the whole truth. He dismisses them as "inaccurate and ridiculous". There are different ways of measuring success, but it's the companies that always know best what they want. "We could say 67 percent of the companies are not earning profit, but it's premature to use the word failure." Companies that "go out" do so with some long-term goals and cannot be measured by short-term results. On a broader scale, he insists, even a period of eight to 10 years is not enough for full evaluation. "Domestic companies need to do a lot of things just to learn to be global," he says.
"To seek quality growth, companies will have to stop haggling over every ounce They should see the broader picture and think about the bigger issues." To build a good company, its leader should have a global strategy for material resources, markets, risks and human resources. "Entrepreneurs must be strategists." One of the bigger issues, he says, is the inevitability of global business. "In the 1980s, China's task was to do away with policy-backed companies. In the 1990s, it was to get rid of the companies without core competence, those too weak to compete in the market. And now, companies cannot survive without a global vision and an understanding of related matters?" Instead of focusing on quick profit, he says, companies should do some homework on the target country's economy, culture, politics and laws. These are crucial factors, although they don't usually reflect in a company's financial statement. He advises Chinese companies to make a realistic assessment of their strengths, especially their integrating ability, before going in for M&As. Only this way can companies expect to grow in their host countries and achieve mutually beneficial results in offshore investments. This is what China has been doing in Africa, as opposed to the old colonial powers, and winning the African peoples' respect and friendship, he says, recalling the time when he used to export goods from Europe to Africa. One may think that He wants Chinese companies to invest abroad without caring about temporary losses because he wants China to assume global leadership, on which US seems to be losing its grip. But unlike most other China-rise advocates, he doesn't think the economic downturn points to the demise of the US as a superpower. In a recent interview with the Chinese-language press, he has given his confidence vote to US President Barack Obama's economic program. The crisis has not eroded the many strengths of the US economy, he says, even though it has to go through a process of readjustment. He expects China and the US to work together more closely in the post-crisis era to help lift the global economy. The US, he says, is China's best competitor and best teacher both. Chinese should learn from Americans how to build a national learning culture. For China, becoming a world leader is first of all a learning process. The country's rapid economic development is only one aspect of its peaceful rise. The main aspects, he emphasizes, are "implementation of values such as equality, justice, transparency, freedom, rule of law and democracy". (For more biz stories, please visit Industries)
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