Reprint: R1104K
China’s economic progress has been so dazzling that people often forget that China Inc. has seen its share of failures too. Just look at the first cross-border acquisitions that Chinese companies made. Many of those high-profile deals—including TCL’s acquisition of France’s Thomson, SAIC’s takeover of South Korea’s Ssangyong Motor Company, and the D’Long Group’s purchase of America’s Murray, Inc.—ended badly. But for the Chinese, failure is not about falling down; it’s about refusing to get up. They quietly changed course, altering the kinds of targets they pursued and their rationale for M&A.
Chinese acquirers have learned to steer clear of deals that involve costly turnarounds or tricky integration. Instead of buying brands, sales networks, and goodwill, they now look for hard assets, like mineral deposits and oil reserves, or state-of-the-art technology and R&D. And where they once tried to buy market share abroad, today they focus on acquisitions that will help them strengthen their share in China. Most telling of all, they’re more willing to walk away—perhaps one of the surest signs of M&A sophistication.
China Inc. sometimes seems unstoppable. The perception is understandable; no other nation has come close to matching the economic strides China has made since the late 1970s. The changes in the country have been so rapid and dazzling, however, that they often blind observers to the fact China has had its share of failure, too.
