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The Rise of HNA: Flying Too High?

June 28, 2017 By Liu Sha

The Rise of HNA: Flying Too High?

HNA Group is the most acquisitive Chinese conglomerate in China. Through acquisitions, the group quadrupled its size and made its debut on the Fortune 500 list as the world’s 464th biggest firm in terms of revenue. And it aims higher: becoming one of the top 10 by 2025 with holdings of $5–6 trillion in assets—more than double the assets held today by JPMorgan, the biggest bank in the United States. What is its business model like? How did the Group, which started as a small regional airline company in China’s southernmost island, with only two jets, make it? What are the risks behind the buying spree?

Filed Under: Airline Industry, All Articles, China, Mergers and Acquisitions Tagged With: Airlines, HNA Group

The Key Features of Chinese M&A in 2017

May 10, 2017 By Deng Yuanyuan and Liu Sha

The Key Features of Chinese M&A in 2017

Chinese companies have been on a buying spree around the globe over the past two years. 2016 witnessed a record level of Chinese outbound mergers and acquisitions (M&A) activity, with 932 deals worth over $220 billion taking place, an increase of 246% compared to 2015, according to PwC China. However, the surge in outbound investments has brought concerns from both Chinese authorities and recipient countries; the latter are becoming more cautious regarding the presence of Chinese capital in large-scale deals in key industries. Affected by such concerns and tighter government scrutiny, the number of M&A deals might not be as numerous in 2017 as in 2016, but the trend will not stop.

Filed Under: All Articles, China, Finance, Mergers and Acquisitions

The Road to Gung Ho: An Exemplary Tale for Chinese Outbound M&A

April 1, 2017 By Zhou Li

The Road to Gung Ho: An Exemplary Tale for Chinese Outbound M&A

Thirty years ago, there was such nationalist angst in the United States over Japanese buyouts of American companies that Hollywood even made a movie about it. In Ron Howard’s 1986 comedy Gung Ho, the fictional Assan Motors Corporation swoops in to buy an idled auto plant in a desperate Pennsylvania company town. The film was a comedy and of course ended with cooperation prevailing and the plant being saved. There is an obvious parallel with the situation today with the US agonizing over Chinese investments in a remarkably similar way to how it worried about Japanese takeovers in the 1980s.

Filed Under: All Articles, China, Globalization, Know China, Mergers and Acquisitions Tagged With: Mergers and Acquisitions

A Firm Called Wanda

October 10, 2016 By Tom Nunlist

A Firm Called Wanda

Wang Jianlin, Wanda’s CEO, the richest man in Asia once said, “Our goal is to make Wanda a brand like Walmart or IBM or Google, a brand known by everyone in the world, a brand from China.” Dalian Wanda, with assets of over $96 billion, has grown from a property company to a large conglomerate, and has its fingers in many pies: from real estate and retail to sports and entertainment. It is also leading a world-wide buying spree, acquiring top assets such as AMC Theatres, Legendary Pictures, World Triathlon Corporation, and Infront Sports & Media. While trying hard to diversify its business, real estate still takes the largest portion in its revenue structure. But how stable is Wanda empire’s future?

Filed Under: All Articles, China, Entrepreneurship, Know China, Mergers and Acquisitions Tagged With: Entertainment Industry, M&A, Movie Industry, Wanda, Wanda Group, Wang Jianlin

Uber-Didi Merger Ends a Fierce Rivalry for Market Share

September 7, 2016 By Jiang Yaling

Uber-Didi Merger Ends a Fierce Rivalry for Market Share

The battle for car hailing market share has ended with Uber merging its Chinese business with local rival Didi Chuxing. The merger deal gave Didi a market share of nearly 90%. There are many worries and questions following the deal: will government consider it to be an absolute monopoly? Will passengers pay more and drivers being paid less? How will Didi manage to operate Uber China afterwards? To answer those questions we need to understand the history of Didi Chuxing—how it operated in ‘grey area’ and managed to beat so many other local competitors before it merged with Uber China—find the answer in our article.

Filed Under: All Articles, Know China, Mergers and Acquisitions, Strategy Tagged With: Didi Chuxing, Sharing Economy, Uber

Will Fosun Group Become Another Berkshire Hathaway?

August 3, 2016 By Liu Sha

Will Fosun Group Become Another Berkshire Hathaway?

Fosun Group, the largest private conglomerate in China, has been on what looks like a no holds-barred acquisition spree for a few years now. It controls the largest number of listed companies in China. It has invested in sectors as diverse as fashion, films and tourism outside China, whereas within China, the company relies heavily on its industrial operations. It is known for having a good relationship with the government, yet last year, Fosun’s founder suddenly disappeared to supposedly assist a graft investigation. How has Fosun scaled up? How do the acquisitions tie in with its business model? And will it realize its ambitions of becoming China’s Berkshire Hathaway?

Filed Under: All Articles, Mergers and Acquisitions, Multinationals in China Tagged With: Chinese Outbound Investment, Fosun

Chinese Acquisitions in the West: Making a Meal of It

April 11, 2016 By Matthew Fulco

Chinese Acquisitions in the West: Making a Meal of It

The Chinese economy grew by 6.9% in 2015, the slowest pace in 25 years. The slowdown is likely to last as China works to change the fundamentals of its economy and transition from relying on investment to growth driven by services and consumption. In November 2015, Chinese President Xi Jinping said: “We will work hard to shift our growth from just expanding scale to improving its structure.” Overseas deal making is one way China is transforming its economy. Once used primarily to acquire energy and resources from developing countries, China’s outbound mergers and acquisitions increasingly involve the acquisition of premium assets in the US and Europe.

Filed Under: All Articles, Know China, Mergers and Acquisitions, Real Estate Tagged With: Chinese Outbound Investment, Mergers and Acquisitions

What Ails Chinese Acquisitions Abroad?

March 14, 2016 By Ying Zhang

What Ails Chinese Acquisitions Abroad?

Why do so many overseas acquisitions by Chinese companies not live up to expectations? Very often the blame is pinned on ‘cultural challenges’ a subjective and suitably vague term. But if you dig deeper, you’ll find that in most cases the problem begins with the acquiring firm’s motives. In the past few decades the majority of Chinese overseas acquisitions have targeted resources. Their aim is to improve performance or lower costs by acquiring other companies’ resources such as technology, raw material, talent, etc. Acquisitions with this purpose come with several challenges afterwards. Is there a better way to evaluate possible acquisition targets? If yes, what is it?

Filed Under: All Articles, Management, Mergers and Acquisitions Tagged With: Management, Mergers and Acquisitions

The Online Sector in China: When Rivals Work Together

January 11, 2016 By Li Hui

The Online Sector in China: When Rivals Work Together

In 2014 rival taxi apps Didi Dache and Kuaidi Dache engaged in a fierce price war that left onlookers stunned. According to multiple sources, Didi and Kuaidi altogether splashed over RMB 2 billion (approx. $376 million) on subsidizing customer ride fares. Yet in early 2015, the two bitter rivals announced their decision to merge. It made little sense. They couldn’t possibly have buried the hatchet that soon. Cases like Didi-Kuaidi are becoming common in China’s internet industry, spanning areas like online travel, group buying and classified advertisement websites. Why is China’s online sector witnessing a series of frenzied mergers, acquisitions and partnerships between sworn rivals?

Filed Under: All Articles, Entrepreneurship, Know China, Mergers and Acquisitions Tagged With: Alibaba, Baidu, Ctrip, Dianping.com, Didi Dache, Meituan, Mergers and Acquisitions, O2O, Qunar, Tencent

When East Buys West: The Challenge of Merger Integration

December 7, 2015 By Bennett Voyles

When East Buys West: The Challenge of Merger Integration

Even when a deal is signed, the acquisition is far from over. The next step, integration, can be even more challenging. Up to 80% of M&A transactions fail to create any new value. This becomes even more complex when a Chinese company is buying a Western company, purely due to the cultural differences. Given that marriages in rich countries end in divorce about half the time, it’s perhaps not surprising that a union between thousands of people also faces long odds. But integration experts say that with foresight, planning and clear communication, many of those challenges can be overcome.

Filed Under: All Articles, Know China, Management, Mergers and Acquisitions Tagged With: Management, Mergers and Acquisitions, When East Buys West Series

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Information, analysis, and interviews about the Chinese economy and doing business in China, from the people who know it best. Presented by the Cheung Kong Graduate School of Business, China's leading business school.


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