5 CHINESE COMPANIES WENT GLOBAL IN 2015
1. Lenovo – With its 2005 acquisition of IBM’s ThinkPad division, the firm had a big year in 2014 with two major acquisitions in the US: Motorola Mobility and IBM’s x86 enterprise server division. The firm is set to continue to grow its global mobile business though both organic and potentially inorganic means.
2.Dalian Wanda – The Chinese diversified conglomerate first made a name for itself in 2012 with its $2.6 billion acquisition of AMC Entertainment in the US. Dalian Wanda, led by billionaire founder Wang Jianlin, has since made other major overseas investments including Sunseeker yachts in the UK and high-profile real estate acquisitions including Chicago’s third tallest building.
3. Fosun – Fosun operates across a diverse range of sectors including real estate, insurance and healthcare, and it has deep pockets to fuel global expansion. In 2015, the firm acquired Michigan-based Meadowbrook Insurance in a $433 million deal and won a bidding war for French vacation resort firm, Club Med, and invested in multiple international real estate projects.
4. Huawei – Despite facing challenges in the US in its core telecommunications equipment business, the firm continues to do exceptionally well around the world. The firm’s consumer business has been booming overseas. In 2016 Huawei set up a principal hub in Malaysia with R&D facilities and shared services.
5. Wanxiang –The Chinese automotive and new energy firm has acquired more than two dozen companies in North America since opening its overseas headquarters there in 1994 and purchased Fisker Automotive.
5 CHINESE COMPANIES LEADING OVERSEAS EXPANSION IN 2016
1. Anbang Insurance - A private financial services company and began operations only 12 years ago as a regional insurance company based in Beijing. It recently closed on a $6.5 billion portfolio of 16 luxury hotels across the country—including the iconic JW Marriott Essex House on Central Park South—previously held by U.S. private equity firm Blackstone Group. Anbang’s in the midst of a $13.5 billion shopping spree dating back to 2014 purchasing companies and properties in South Korea and Netherlands.
2. WH Group - The company is results of Shuanghui’s $7.1 billion hostile takeover of American pork producer Smithfield Foods, which owns food brands such as Farmland Pork, Nathan’s Famous, and its namesake Smithfield. The deal brought more U.S.-produced pork and pork products to China, where food safety has become an issue in recent years. WH Group currently owns two main subsidiaries Shuanghui Development and Smithfield Foods, making it the world’s largest pork producer and China’s biggest meat producer.
3. Dalian Wanda - Wanda is a Chinese real estate developer which has quickly expanded its business holdings in recent years. Its first major international purchase was AMC Theaters in 2012, and it has since snapped up entertainment ventures both in the United States and China. Its recent purchase of production house Legendary Entertainment for $3.5 billion, makes it the first Chinese company to own a major American film company.
4. Fosun International - Fosun is a Shanghai-based private investment holding company and was one of the first Chinese investors in foreign assets.Fosun is continuing its overseas shopping spree in markets it views as undervalued. It’s currently in the running to place final bids for part of National Grid’s UK gas distribution business, and Fosun recently announced $1 billion commitment to form a commercial real estate investment trust in India. Fosun has a diversified portfolio of assets, including well-known foreign assets such as vacation resort operator Club Med, circus performance troupe Cirque du Soleil, accessory maker Folli Follie, women’s fashion label St. John, and downtown Manhattan skyscraper One Chase Manhattan Plaza.
5. HNA Group - HNA is the parent of Hainan Airlines, a Chinese airline that predominantly focuses on domestic routes and is based in the Southern vacation Province of Hainan. Its single biggest purchase in 2016 was the $10 billion acquisition of CIT Group’s aircraft leasing business by Avolon Holdings, HNA’s aircraft leasing arm. On top of that, acquisition for HNA for 2016 includes the $6 billion purchase of U.S. IT and software distributor Ingram Micro, the acquisition of Carlson Hotels (which owns Radisson and Park Plaza hotels), a minority stake in Virgin Australia airline group, and its most recent purchase of eight golf courses near Seattle for around $137 million.
IMPORTANCE OF PR
1. PR assistance is important for any company going into a foreign market because it allows them to understand how to communicate effectively to the local audience.
2. Chinese companies going abroad need to build effective communication campaigns that relate to the local market audience, while cementing strong stakeholder relationships.
BUILDING TRUSTS
1. Chinese companies who do not invest in building their own brand identity, will inherit negative brand attributes and market perception from ‘Brand China’.
2. Research and understanding of the local market, especially in terms of how the public perceives Chinese companies, is crucial to how to approach policymakers and consumers.
3. A simple guideline is to first define the brand and identify what it stands for, and how it relates to the target audience.
4. Second is to Conduct a stakeholder mapping and audit session to identify who the stakeholders are, and how they perceive the brand and products and what’s important to them. Where are the gaps and what can be done to close them?
MANAGING COST AND QUALITY
1. Chinese companies need to start educating the customer about how innovation, technology, and producing superior quality products is the key to company success as well as maintain loyal customers.
2. With certain manufacturing components shift outside of China, the cost will inevitable increase and Chinese companies need to relay a message that their products are partially produced "locally" creating jobs and economic clusters.
OTHER FACTORS FOR CHINA PUSHING OVERSEAS
1. Being open and transparent: In Western markets, the public, policymakers and stakeholders place a lot of emphasis on companies being transparent and open.
2. Understanding and adapting Western business practices and culture, especially how to handle government and media relations in the West without using "guanxi" aka personal influence
3. Chinese companies also need to understand that the role the government plays in the West is very different to the paternalistic role it plays in Asian cultures.
