ABSTRACT
The use of M&A as a globalization strategy by Chinese companies unfolded in three phases over the past 15 years. Initially, executives pursued acquisitions to establish a presence in foreign markets, but these moves were complicated by post-merger integration and management challenges. In response, Chinese business leaders turned their focus to deals involving natural resources and tangible assets that did not rely as much on post-merger integration for success. However, this strategy was vulnerable to swings in commodity prices and operational obstacles that caused many deals to underperform. In a third, more recent phase, Chinese companies have sought to acquire intangible assets such as talent and intellectual property (IP) – critical components of innovation. This phase saw Chinese companies become increasingly sophisticated in both strategy and management.
As investors seek clues about how Chinese companies will approach M&A in the coming years, the evolution of M&A strategy can shed light on where executives will place their bets – as well as China’s ability to shape the global economy.
