Culture clash cited for M&A failures
Print Edition
Cultural conflicts are responsible for 70 percent of the unsuccessful cases of mergers and acquisitions by Chinese companies, observers said.
Around 70 percent of Chinese enterprises’ overseas M&As flopped and a clash of cultures was the reason why 70 percent of the transactions failed, according to MWE China Law Offices yesterday.
Winston Zhao, senior counsel with the law firm, said that companies must be open-minded to the challenges that a clash of cultures brings so that they can foster a sense of community identity and sense of belonging to the companies being taken over.
A successful investment also requires a clear strategy, risk control measures and a post-acquisition integration plan that will cover every aspect of the business operation, Zhao added.
M&A activities overseas are rising for Chinese companies which are expanding their footprint from natural resource and energy industries to consumer sectors including agriculture, food, automobile, entertainment and real estate, observers said.
Shanghai’s outbound investments hit US$13.6 billion in 2012, up from US$500 million in 2001, said Yang Xi, head of a business chamber.
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