China’s new international M&A

---

This brief article from Forbes goes someway into explaining China’s new M&A which can be basically sumarised as “buy older technology and branding, carryout some R&D and call it our own” It’s not an entirely new strategy, as Honda and Toyota, as well as Korean automotive giants like Hyundai and Kia have carried out similar plans before now, but now we can actually see the plan in progress with the acquisition of Volvo, Saab, and LDV:

The Hummer bid was stymied by Chinese bureaucrats. Beijing didn’t want a Chinese company buying the poster child for American gas-guzzling when it was both trying to establish China’s green credentials in the run-up to last year’s Copenhagen climate conference and to promote a green car industry of its own. Some officials were also miffed that privately owned Sichuan Tengzhong, which isn’t a car company but makes heavy industrial equipment, hadn’t fallen in line with China’s car companies by passing on Hummer when GM’s bankers started shopping it in 2008.

Officials have plans of their own for the overseas expansion of China’s key industries. The focus up to now has been to acquire resources such as raw materials and energy for capital intensive heavy industry. Technology, and to a lesser extent, brands, have come via joint ventures–called the “linkage, leverage and learning” strategy in China. The next phase of that, now starting, is to seek out brands and technology to be used as the foundations of a new generation of innovative and branded Chinese products for both domestic and global markets.