Chinese companies have for the last decades enjoyed the ‘low hanging fruits’ of a high growth era. Today, however, the Chinese market is cut-throat competitive.
Companies are under pressure caused by
- Over-capacities and price competition
- Insufficient technologies and innovation
- Changing consumer behavior
- Dependency on one market (China)
- New policies and standards of the Chinese leadership
A proper response is to innovate and expand geographically, but time is of essence for Chinese companies to meet new market conditions and opportunities in China anno 2016-2020.
Supported by the Chinese government “Go Global” initiative, many Chinese companies is embarking on a cross-border acquisition strategy. They have the money to invest and the determination to buy – but as Europe is a diverse continent they are unsure where to look and how to carry a M&A process – and their business culture is different from Europeans, so the European companies may turn them a blind eye.
At the same time, stagnant local market conditions characterize Europe. Meanwhile, niche European technology companies often have insufficient financial capability and inadequate know-how and scale to Win in China. Some of these companies will benefit from shared ownership (minority or majority) of their company with a Chinese strategic investor. The upside is often a many-fold increase in turnover and profits, and an expansion of the production base in the home country as well as in China.
Many potential deals fail because of insufficient match-making activity, communication, preparation, and creativity. At Across Partners, we are a catalyst for companies to make a smooth and effective win-win process.
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