Opportunities For Overseas Mergers And Acquisitions In Garment Industry

"In the new competitive situation of changing the stock market and controlling the power, we should push forward the globalization strategy with the innovative thinking of the industrial chain layout, and the value and significance of overseas mergers and acquisitions have been reassessed."

Xin Ma group (2E ()) Xu Jingbo said. clothing 60% of the cost of enterprises comes from fabrics. As a company without fabric production, new Ma will bring about "cost reduction and efficiency improvement" in 2008.

Contrary to the belief of the partners, the outside world is speculation about the inherent risks such as policy, finance, management and cultural integration, which take Chinese private enterprises as the main body.

Just a few months later, Fu Ziying, Vice Minister of Commerce of China, said at the sixth annual meeting of the China Import and export enterprise. Due to the tight liquidity in the US financial market due to the subprime mortgage crisis, some private enterprises and institutions were in temporary difficulties, providing good opportunities for mergers and acquisitions for Chinese enterprises. "These enterprises have well-known brands and strong international marketing networks, and have strong R & D capabilities. If our enterprises can succeed in mergers and acquisitions, these advantageous resources can be all for me, and can greatly enhance the competitiveness of Chinese enterprises in international competitiveness."

This statement is considered to indicate the policy direction of the Ministry of Commerce this year.

　　 A contest beyond policy

With regard to the pressure caused by the appreciation of the renminbi to the export oriented enterprises and the double load from the internal and external markets, Fu Ziying believes that Chinese enterprises should also see opportunities when they see risks.

"When we see the impact of RMB appreciation on exports, we should also see that appreciation can reduce the cost of imports and foreign investment. Historically, German and Japanese l enterprises have used the favorable opportunity of currency appreciation and relatively cheap foreign capital to actively expand the scale of foreign investment, from simple export to export and overseas production, realizing the interaction and interaction between trade and investment, and gaining a lot of profits.

Based on this view, the Ministry of Commerce said that the government should provide tax convenience and relax relevant controls on foreign exchange use, so that "going out" enterprises can issue foreign exchange bonds for financing, and continue to promote agreements with countries concerned in economic and trade cooperation, investment protection and avoidance of double taxation, so as to create a favorable external environment for cooperation between enterprises and governments.

As early as the beginning of the new year, Jiang Hengjie, executive vice president of the China clothing association, put forward the theory of value innovation: "integrating resources both inside and outside the world is a new innovation of China's clothing industry. We should overcome some backward ideas, actively explore the brand development route, find our own position, and be ready to integrate or integrate at any time.

Now it seems that the more obscure argument at that time was the fear of uncertain policy factors and the tolerance of the majority of enterprises that formed inertial thinking to new things. When reporters interviewed people in many sectors about YOUNGOR's merger and acquisition, despite their keen eyes on this folk sample, they were always suspicious of its universality.

"In a short time, it is difficult to replicate in this industry." A senior official admitted that the transformation of the main body of mergers and acquisitions from the state commercial banks and state-owned large enterprises to private enterprises is a matter of nearly two years. Despite obvious policy leaning, a new market behavior with huge capital as a grafting tool is not necessarily covered by policies and policies.

Authoritative survey shows that the success rate of overseas mergers and acquisitions of Chinese enterprises is only two to 30%, which contains enormous risks:

China's existing policies to encourage and support overseas mergers and acquisitions of local enterprises are still very limited and lack practical operability. At present, there is no clear industrial policy and Industrial Guidance standard for overseas mergers and acquisitions in China, and the "going out" of enterprises is generally in a state of disorder.

China's legislature has promulgated a number of laws and regulations regulating and restricting M & A activities. However, these normative documents are almost confined to regulate domestic mergers and acquisitions, and regulations on overseas mergers and acquisitions of Chinese local enterprises are basically in a legal vacuum.

Companies that seek buyers often have one thing in common, that is, the departments that are ready to sell are loss making or non profitable, non frontier areas and downhill businesses.

Transnational mergers and acquisitions require strong financial support. However, at present, the financing channels of Chinese enterprises are too limited, and capital markets and financial institutions are also not developed. This leads to the fact that Chinese enterprises can only rely on the power of international consortia when overseas mergers and acquisitions.

On the one hand, the exchange rate promotion has enhanced the strength of Chinese enterprises' foreign investment, but at the same time, it has also reduced the assets stock of overseas subsidiaries of foreign companies in Renminbi denominated accounts of domestic parent companies.

In addition, the gap between the internal governance structure of Chinese local enterprises and overseas mature enterprises is very large. How to absorb the positive factors of western corporate culture and retain the cultural advantages of local enterprises has also become a challenge to the wisdom of Chinese entrepreneurs.

　 Complementary survival

Mastering the common sense of acquisition and grasping the timing of policy is equally important for avoiding risks.

According to statistics, many Spin Large scale clothing companies or listed companies are making good profits at present, with low asset liability ratio and considerable capital strength and financing capability. The net profit margin of excellent clothing enterprises can reach over 20%, and the general asset liability ratio is also 30%-40%. The total assets of the top ten enterprises in the industry are 1 billion 450 million yuan, and the first YOUNGOR group's total assets have reached 4 billion 200 million yuan.

However, "it is only one-sided to lock the capital strength only with the terms of merger and acquisition. It is important to have the ability to do more important things." Chen Guoqiang, an expert in the industry, said that enterprises with poor capital strength and excellent management capabilities are also the main players of the new round of overseas mergers and acquisitions. "Many emerging enterprises, though small in scale, have a global vision and pay attention to the compatibility of all kinds of cultures. Through overseas mergers and acquisitions, the global allocation of resources will bring about the development potential that can not be underestimated."

Some experts who have experience in mergers and acquisitions have indicated that most foreign brand enterprises are not large in scale. Some small businesses can only buy a small amount of capital because they are short of market or lack of capital. Like most of the textile and garment industry in Spain shoes The average number of employees in the manufacturing industry is 34, while only 0.4% of employees are over 500. "Even if the scale of a company is large, it can also take the way of asset separation and merger through capital operation skills, such as simple acquisition and marketing network, R & D department and so on, so that the funds needed for mergers and acquisitions will be greatly reduced."

Another key to improving the efficiency of mergers and acquisitions is complementary pairing. According to Li Cheng Cheng, 120 million dollars is not a big investment. 90% of the products sold in the new Ma group are sold in the US. This is a good supplement to YOUNGOR, who has not really entered the US market. But the new Ma group has strong R & D capability and high added value of products, which YOUNGOR really needs.

"It is inevitable to rely on enterprises to hunt for M & A targets alone." Authorities believe that there are many ways to expand overseas M & A ideas, such as relying on the Intergovernmental credit of the overseas cooperation areas of the state, considering the complementarity of the cooperation from the industrial chain fit degree, and docking with foreign institutions by means of trade associations and other organizations, so as to avoid the decision-making errors made by asymmetric information.

It is understood that some overseas acquisitions' common sense 'is outdated. As in the past, China, which was more cautious about Chinese capital, was sending an olive branch to Chinese enterprises because of the subprime crisis. A local overseas investment in Ningbo attracted more than ten states' enterprises in the United States to explore the way. Some enterprises in Italy came to China to seek cooperation, and no longer simply passed the processing links, but explored the operation mode of combining their high-end parts with Chinese manufacturing.

In the new competitive situation of changing the stock market and controlling the power, we should promote the globalization strategy with the innovative thinking of the industrial chain layout, and the value and significance of overseas mergers and acquisitions have been reassessed.

　 Search for sound

　　 Dongguan dream Clothes & Accessories Chen Huiyong, general manager of limited company:

Some of my friends invest in Vietnam or Bangladesh. According to the feedback information, the labor cost there is cheaper. For example, the average monthly wage of Bangladesh ordinary textile workers is only about more than 40 US dollars (about 300 yuan), while the average monthly salary of ordinary textile workers in the Pearl River Delta is more than 1000 yuan.

　 Zhao Hongxuan, partner of M & s law firm

The most difficult problem in mergers and acquisitions is not the success of mergers and acquisitions. The most difficult thing is how to manage and manage businesses well after mergers and acquisitions. Chinese enterprises need to seriously consider the internationalization of management teams and the integration of management teams.

In overseas mergers and acquisitions, Japanese companies were not very successful, while the United States was relatively successful. Japan's enterprises that went out of L were large enterprises, and their efficiency should be very high. However, they were still hard to succeed in overseas acquisitions, including cultural differences, language differences, and management methods.

The success rate of overseas mergers and acquisitions of American enterprises is even higher. This may be because many large American companies have been working on mergers and acquisitions for a long time, and they already have many experiences. They know where the key lies and where they are difficult. American enterprises have specialized departments and teams in mergers and acquisitions. Their labor cost in mergers and acquisitions is very high, and many American enterprises' growth strategy is M & A. Compared with the current situation in China, only a few large companies have teams specializing in M & A transactions.

　　 DELL CEO evaluated Lenovo Inc's acquisition of IBM's full PC business at a price of $1 billion 750 million:

I am not optimistic about the future of this combination, and I do not think it will pose any threat to us.

　 Liu Chuanzhi, Lenovo's godfather, responded on two occasions.

The situation is not as pessimistic as the external imagination. Since Lenovo dares to make this decision, it shows that we have certain assurance.

Lenovo's risk of mergers and acquisitions is really great, but it is also helpless. Lenovo's domestic development space is already very narrow. It is better to go out and fight for it than to fight for limited space in China.