More And More Chinese Companies Have Begun Overseas Acquisitions.

Looking overseas, though it looks amazing, it's exciting. However, as a commercial activity, the reason behind it is still inseparable from the purpose of capital operation.

With the growth of China's economy, the desire of Chinese enterprises to enter the upper reaches of the global value chain is becoming more and more intense. More and more Chinese enterprises begin to take overseas acquisitions. At the same time, the field of overseas mergers and acquisitions is also from the past resources and energy to automobiles. clothing Expand in a broader field.

　　 Accelerating

It has been called "Chinese clothing" in 2008. brand First case of overseas mergers and acquisitions " Youngor Successful completion of the merger and acquisition of the new Malaysia clothing group, the core business department of Kellwood, a famous clothing company in the United States, has been going on for nearly 9 years in China's fashion enterprises. The overseas merger and acquisition mode of China's garment enterprises has been going on for nearly KWD years. In the past 9 years of overseas M & A, numerous "YOUNGOR" has provided valuable experience for Chinese clothing to go to the world, with the help of international mature brand channels and business models, and quickly entering the upstream of the value chain.

For example, in the same year as YOUNGOR's acquisition of new horses, Zhejiang Hua Ding group bought the entire wool textile factory in Italy with 3 million euros, from equipment, technology to personnel into the bag. Then, in 2009, the Bank of China industry acquired assets and business and assets of Duncan cotton mill, an unincorporated entity under the British Dawson trade, and the acquisition of French Pierre Cardin by a once booming Chinese private enterprise. This series of cases shows that the pace of overseas expansion of Chinese garment enterprises is accelerating.

Especially after China's economy has entered the new normal, the domestic market is in a slump, and enterprises hope to meet the demand of complementary resources by investing in new businesses abroad. "Domestic production costs continue to rise, especially in the past two years, textile and garment export enterprises generally have less than 2% of the small profits. Many enterprises are insisting on exports in the case of slight losses to protect factories." Chen Cangsong, vice president of Fujian textile and garment export base, said.

　 Multi factors promote together

The industry pointed out that the continuous warming of overseas mergers and acquisitions of Chinese enterprises is the result of multiple factors. At present, Vietnam, Kampuchea, Thailand, Indonesia and other Southeast Asian countries export only 2% to 3% of the EU's textile tariffs, while China's textile exports to the European Union need to impose a tariff of about 12%. All these have confirmed Chen Cangsong's view that clothing exporters' profits are low. In such a big environment, overseas mergers and acquisitions will undoubtedly become the helpless choice of some enterprises. For example, Vietnam's largest textile mill is actually invested by Tianhong Textile Group, a Chinese enterprise.

According to the world clothing shoes and hat net, only in 2016, Shandong's 1 billion 300 million euro (9 billion 670 million yuan) purchase of French light luxury clothing group SMCP's controlling stake, song's 240 million yuan acquisition of Tang Li International 65% stake and the song Li Si 370 million yuan holding French fashion brand IRO three has involved the capital to invest billions of yuan, and Shanghai fashion brand wagnnasi has bought the Chinese consumer very familiar South Korea "Little Bear" Teenie Weenie and so on. In addition, women's clothing brand Mass Phil, long Zi shares, men's clothing brand Li bang and so on are also in the overseas mergers and acquisitions.

It is not only the survival of a single enterprise but also the health and integrity of the whole regional economy. At present, China's relatively relaxed overseas M & a policy and China's increasing international influence have also made foreign clothing giants aware of the importance of cooperation with Chinese enterprises. Meanwhile, the European debt crisis has provided an opportunity for Chinese enterprises to buy European enterprises at a low price.

According to Lin Cai Yi, chief economist of Guotai Junan, some developed economies and Brazil and other emerging economies have suffered a serious recession in the current round of commodity slump. Local equity and asset prices are relatively cheap. This is a good opportunity for Chinese enterprises to "go out" in mergers and acquisitions. At the same time, at present, the traditional industries in various countries are in urgent need of transformation under the impact of the new round of industrial revolution, which creates opportunities for Chinese enterprises to acquire overseas assets and to copy assets.

　　 Strategic layout is the most important.

Looking overseas, though it looks amazing, it's exciting. However, as a commercial activity, the reason behind it is still inseparable from the purpose of capital operation. For China's textile industry, the overseas merger and acquisition cases of Chinese garment enterprises have been successful, and there are many cases of failure. International experience shows that in view of the differences in information asymmetry and culture, it is difficult to produce good results even if the merger is successful. A large number of research institutes at home and abroad also show that only 3/10 of large-scale mergers and acquisitions really create value. According to different successful M & A standards, the failure rate of M & A is between 50%~70%.

Cheng Weixiong, general manager of Shanghai Liang Qi Brand Management Co., Ltd. believes that the large-scale overseas mergers and acquisitions of domestic garment enterprises, in addition to complementing resources, is more deeply rooted in the fact that the clothing enterprises that have realized the capitalization operation of the listed companies have to pursue new concepts in order to please investors and capitalized operation in the context of the continuous cold market. In an interview with reporters, Cheng Weixiong said that when the concept of electricity suppliers and O2O were no longer able to attract investors' attention, investing in overseas fashion brands became the first choice for all garment enterprises.

It is an important topic of national economic strategic significance to allocate resources, reduce costs, enhance competitiveness and increase value-added products on a global scale. Although the road of capital may be strong and fast, it is also dangerous and fragile. The impetuosity of Chinese businessmen is particularly evident in the rapid expansion, especially after the acquisition of brand management is a lack of sense of security. It seems that the expansion is a way, rather than to create their own "Louis Vuitton".

In fact, the success of overseas M & A is not a yardstick of brand value. Can overseas mergers and acquisitions help Chinese garment enterprises achieve the ultimate goal of maximizing value? Is the overseas merger and acquisition of Chinese clothing enterprises a short-term phenomenon or a strategic behavior in the future? Is it important to understand the strategic layout?

　 There's still a long way to go.

"Through overseas mergers and acquisitions, the introduction of advanced products, technologies, business models and management systems will help deepen the supply side reform, stimulate enterprise vitality and consumer potential, optimize consumption structure, and promote China's economic transformation and upgrading." At the two sessions this year, Yuan Yafei, chairman of the three cell group and member of the National Committee of the Chinese people's Political Consultative Conference, publicly stated that "overseas is mainly the risk of laws, regulations and systems." The legal system of each country is different. Enterprises need to pay close attention to the change of host country's policies.

It can be said that the road of overseas mergers and acquisitions of Chinese enterprises has just begun, and there is still a lack of experience in many aspects, such as laws, culture, customs and habits. If CNOOC bought us Unocal oil company for $18 billion 500 million, it failed in the end. The merger negotiations between HUAWEI and British Nicole eventually failed because of Ericsson's appearance. In February this year, purple light shares planned to enter the US western data company's plan officially announced abortion. According to the announcement of purple light shares, the takeover of the takeover was decided by the board of directors of the board of directors of the Foreign Investment Commission (CFIUS). Coupled with the merger and acquisition of Mei Guang technology, purple light has been blocked by CFIUS twice. "This once again highlights the stringent policy approval challenges faced by Chinese companies seeking investment in the United States." Insiders said.

Wang Junjie, a partner in merger and integration services at Ernst & amp; e consulting department, said: "Chinese entrepreneurs should realize that the cultural differences between the two sides are huge because they are faced with not only the organizational culture differences and conflicts from the corporate level, but also the differences and conflicts of the national culture. Chinese entrepreneurs should set up a cultural integration group to prevent cultural conflicts and implement effective integration.

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