Strategic orientation, success lies in ability.
-The Road of Transnational Merger and Acquisition of China National Chemical Corporation
Ke Yinbin, Director of Research Department of Peking University Enterprise Management Case Study Center.
Kang Rongping, a researcher at the Institute of World Economics and Politics, Chinese Academy of Social Sciences
Liu Peking University, Deputy Director of Enterprise Management Case Study Center.
In 2006, China Chemical Industry intensively carried out three transnational mergers and acquisitions, all of which achieved great success. Compared with the internationalization of some enterprises in China, the logic of China's chemical internationalization success lies in: the early internationalization experience is "gene", the domestic M&A activities are "foundation" and the cooperation with first-class professional service organizations is "foundation".
Under the guidance of the strategic orientation of "new chemical materials", China National Chemical Corporation formulated a multi-level internationalization strategy, and successfully implemented the wholly-owned merger and acquisition of three foreign enterprises in 2006. The target companies are all subsidiaries/businesses of famous big groups with "double leadership" in technology and market, and their technical resources and management resources have formed complementary and synergistic effects with the production resources and market resources of China Chemical. There are many memorable places in the three transnational mergers and acquisitions, such as strategic design based on opportunities, characteristics and reality, multi-level and sufficient strategic preparation, the art of grasping strategic opportunities at different levels, and cultural integration before the transaction.
Strategic direction, complementarity and preparation
At the beginning of the establishment of China Chemical Industry, the overall strategic orientation was "old chemicals and new materials", that is, inheriting the inheritance of several generations of chemical workers, developing new chemical materials in the process of restructuring and transformation of state-owned chemical enterprises, and extending them upstream and downstream appropriately, reflecting the control, influence and driving force of key areas and important industries in the chemical industry.
Clear strategic positioning
The strategic positioning of "old chemical industry, new materials" is based on "new chemical materials" as the main business scope, emphasizing the embodiment of control (having independent intellectual property rights and mastering key core technologies), influence (occupying a dominant position in several market segments) and driving force (driving downstream industries and China's entire chemical industry) in key technical fields and new chemical materials industries. In addition, this strategic goal attaches importance to the strategic role of merger, acquisition, reorganization and transformation, and has the strategic flexibility of "appropriately extending upstream and downstream".
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Three Transnational Mergers and Acquisitions of China Chemical Industry in 2006
Established in May 2004, China Chemical Industry Co., Ltd. is a large-scale state-owned enterprise approved by the State Council, based on enterprises affiliated to the former Ministry of Chemical Industry such as Bluestar Group and Haohua Group, with new chemical materials and special chemicals as its main business and Ren Jianxin as its general manager. China Chemical has l 18 production and operation enterprises, 24 scientific research institutes and 10 listed companies. In recent three years, the sales revenue of China Chemical Industry increased by 965,438+0% on average, and its profit increased by 72%. In 2007, the asset scale and sales revenue exceeded 654.38 billion yuan.
In 2006, China Chemical completed three transnational mergers and acquisitions, which is unique in the practice of China enterprises. These three mergers and acquisitions were: in June, April and June, 2006, they successively acquired 65,438+000% shares in silicone and sulfide business of France Andisu, Australia Kenos and France Rhodia.
Coordination based on strategic positioning and complementarity
In M&A theory, synergy is considered as the key factor. China Chemical's cross-border M&A also attaches great importance to synergy.
First of all, the main business of the target company conforms to the strategic positioning of the acquirer, and the business of the acquired enterprise belongs to the business scope of "New Chemical Materials" of China Chemical.
Secondly, the core technology of the target company is not mastered by China enterprises. For example, Andy Su Company owns 398 methionine patents (755 patents applied), and Rhodia Company owns 20 1 silicone patents (52 1 patents applied).
Third, the main products of the target company have development prospects in the China market. For example, methionine is the main animal feed additive. As the second largest feed producer in the world, China has a huge market demand with an annual growth rate of 10%. For another example, silicone products and their downstream deep-processed products have good realistic demand and development prospects in China market.
Target company: both technology and market are in a leading position.
Unlike most M&A targets of other China enterprises, the three target companies of China Chemical M&A have high technical status and market position. For example, Andy Su Company is the second largest producer of methionine in the world with a market share of 29%. The vitamin business ranks third in the world, with a market share of about 265,438+0%. The biological enzyme business ranks fourth in the world with a market share of 9%. Kenos company's management ability is first-class in the industry, and its safety, environmental protection and health management system (SHE) is in the leading ranks in the world. At present, China Chemical is transferring its SHE system to domestic enterprises under the group for promotion.
Well-designed merger and acquisition scheme and process
First of all, three cross-border mergers and acquisitions 100% owned the company's equity and business control rights, but did not take the form of joint venture with the original shareholders or business controllers. This wholly-owned way has laid a solid foundation for the corporate governance and management after the merger. For example, China Chemical completely controls the board of directors, which not only ensures the implementation and implementation of its development strategy in overseas enterprises and global markets, but also provides opportunities for the top management of the original enterprise to enter the board of directors, which is difficult to achieve before the merger; Taking wholly-owned overseas enterprises as the "base", we will conduct corporate mergers and acquisitions again in the global market to further consolidate and expand the influence and control of China Chemical; Transfer the technology and management resources owned by overseas enterprises to China market for integration, enhance the overall organizational capacity of China Chemical, and lay the foundation for achieving the strategic goal of becoming one of the top 500 companies in the world.
Second, the acquirer and the target company send senior managers to each other, which breaks through the traditional transnational M&A management integration model. In the traditional M&A integration model, once the acquirer obtains 0/00% equity and operational control of the company, more managers are often sent to senior management positions, while the former senior managers leave their posts one after another. China Chemical broke through this model, and only appointed a small number of managers to the target company, mainly as deputy directors. The positions of the former senior staff remained basically unchanged (only the CEO of Andy Su was replaced by the former Chief Operating Officer), and some staff positions were promoted (such as joining the board of directors). Drucker once put forward a criterion to test the success of M&A: 1 year, the top management positions of the merged enterprises were promoted. This standard has been supported by the chemical industry in China.
Third, cross-border mergers and acquisitions are combined with domestic new construction. China Chemical is exploring a new mode of organic combination of cross-border M&A and domestic new construction at the specific business level, which is rare in the practice of domestic enterprises. For example, China Chemical began to build a new methionine plant with an annual output of 6.5438+0.5 million tons in Tianjin by using the world-leading patented technology of Andy Su Company.
M&A Strategy Based on Vision and Ability
The practice of M&A shows that the success of M&A strategy mainly depends on the combination of the strategic foresight of the acquirer and the professional ability of the service organization. The strategic foresight of China Chemical is mainly manifested in the understanding of the characteristics and essence of the industry, the strategic preparation and timing of the acquirer, and the cultural integration in the whole transaction process (especially before the transaction), which are all strategic factors lacking in other multinational M&A cases of China enterprises.
Strategic design based on reality
According to Professor Chandler's research, at the beginning of 2 1 century, chemical industry no longer became a real high-tech industry, because chemical science no longer produced basic new knowledge to fundamentally stimulate the commercialization of new products.
Based on a clear understanding of the layout of the chemical industry, Ren Jianxin has formulated the internationalization strategy of China chemical industry with transnational mergers and acquisitions as the main content. Due to the consideration of cost, market and environmental pressure, foreign large-scale chemical enterprises gradually transferred the surplus production capacity and backward production equipment to China, and the technology was blocked, which made the development space of traditional chemical industry in China with scattered layout, small scale and backward technology even narrower. This requires our related enterprises to increase the pace of "going out", control high-quality enterprise resources in a global perspective, and upgrade the industrial level and level. The adjustment of international industrial division of labor and the rapid development of China's economy provide opportunities and challenges for us to implement international operation. The best and fastest way for China enterprises to enter the international market and integrate into the international community is to acquire internationally renowned enterprises and brands, but this requires long-term preparation and running-in. International M&A is not only a business activity, but also a communication and cultural integration between people.
This cross-border M&A strategy has the following characteristics:
(1) seized the opportunity of global chemical industry restructuring and adjustment. The global chemical industry reorganization began in the 1990s, and the global chemical industry M&A reached its peak in 1999. After that, it generally slowed down, but it is still active.
(2) Understand the essential characteristics of chemical industry. Every major chemical company in the world has its own sphere of influence. In this case, latecomers can't take advantage of the "pre-emptive" opportunity brought by new technologies, and they can only take the form of cross-border mergers and acquisitions to undertake the business and market that they have voluntarily or passively given up from established multinational companies.
(3) Taking the acquisition of technical resources as the main purpose, mainly based on the general lack of core technologies in China's chemical new materials industry, we will establish our own "sphere of influence" in the global market.
(4) Based on long-term and sufficient strategic preparation (especially interpersonal communication and cultural integration).
(5) Leave room for international capital operation. After the acquisition, the sales revenue and profits of the four companies acquired by China Chemical reached the highest level in history, and the acquisition cost only 9.5 billion yuan. At the time of acquisition, the valuation multiple is about 4 times of the current year's earnings before interest, tax, depreciation and amortization (EBITDA). According to the evaluation of international equity investment funds, the current market value of these four companies has reached 160 ~ 180 billion yuan, that is, more than 7 times of EBITDA can pass capital. To this end, Bluestar successfully introduced Blackstone Group, the largest private investment fund in the United States, subscribed for 20% of the shares (including overseas assets) by market value method, and raised 600 million US dollars in equity funds, which laid the foundation for further overall listing.
Multi-level and adequate strategic preparation
China Chemical's three cross-border mergers and acquisitions were all carried out on the basis of full strategic preparation, mainly in the following aspects:
(1) Preparation of strategic starting point in terms of overall scale and strength. In the era of Blue Star Group, Ren Jianxin started the strategic thinking of cross-border M&A, but did not rush to put it into action. The main reason is that there is a big gap between the overall scale and strength of Bluestar Group and the qualification requirements of cross-border mergers and acquisitions. Therefore, Ren Jianxin takes the acquisition and reorganization of domestic chemical enterprises as its main task, and actively promotes the establishment of China Chemical Industry Group. When China Chemical was founded in 2004, its total assets and sales revenue were nearly 30 billion yuan, and many products ranked first in China market and in the forefront of Asian market. This is the scale and strength of Ren Jianxin's cross-border M&A strategy in 2005/2006.
(2) Preparation of strategic talents at the organizational setting level. When Ren Jianxin was the general manager of Bluestar Group, he set up an international department and overseas offices to investigate and study overseas markets and enterprises, and gathered a group of outstanding talents engaged in international operations. Later, most of them became the backbone of China Chemical to carry out international business.
(3) Compile strategic information about global chemical industry trends. China chemical industry was established on the basis of enterprises directly under the former Ministry of Chemical Industry. Business leaders and related professionals have a comprehensive and in-depth understanding and grasp of the overall situation of the chemical industry at home and abroad. At the same time, it also has specialized economic and technical research and consulting institutions in the chemical industry. China Chemical Information Center is one of the professional companies under China Chemical Industry, and it is the largest and most powerful strategic/competitive intelligence research institution in China Chemical Industry. Most of the 24 scientific research institutes owned by China Chemical Industry hold the most advanced technical information in their respective technical fields. Therefore, it can provide powerful information service and research support for multinational M&A in China chemical industry, especially in the early stage of M&A target selection.
(4) Strategic psychological preparation of the target company and related personnel. Andy Su and Rhodia are both foreign enterprises that have been dealing with Bluestar Group and China Chemical for more than 3 years. First, the technology transfer negotiations failed; Then we discussed the establishment of a joint venture company, but failed; Rhodia Company and China Chemical Company established a strategic alliance and cooperative relationship in 2004. In this process, the frequent contacts between senior staff of both sides not only enhanced understanding and recognition, but also directly obtained timely and accurate information from the other side, which undoubtedly laid a good psychological foundation for future mergers and acquisitions.
Seek, grasp and create opportunities for mergers and acquisitions.
When China Chemical was founded, all the strategic preparations were basically ready, so it officially took cross-border M&A as its main task, and it was fully launched and actually operated.
Judging from the time interval selection of cross-border M&A transactions, it is extremely rare to complete three consecutive mergers and acquisitions in 2006. This high-density cross-border M&A has a low success rate and requires high resources and capabilities of the acquirer. China Chemical has been able to do this successfully, mainly because of the sufficient strategic preparation in the early stage. China Chemical has followed these companies for a long time, some of which lasted for three years. Not only did they fully understand their historical and cultural background, production capacity, technology, market and prospects, but they also made frequent contacts with major shareholders and senior executives of these companies and became good friends. They also deepened their understanding of the corporate culture, economic strength and development prospects of China Chemical Industry and enhanced their recognition of corporate values. After more than three years of strategic preparation, many mergers and acquisitions were completed that year, which is a "logical" thing for China Chemical.
The timing art of single M&A transaction is more obvious in M&A in Andy Su and Rhodia. Due to the influence of SARS, the global poultry stock and breeding decreased, and the output, sales volume and profit of methionine products of Andy Su Company were greatly affected. China Chemical Company thought it was a good opportunity to reduce the acquisition cost, so it took the initiative to attack. On the basis of years of communication, the two parties formally signed a contract in 2005, realizing a low-cost acquisition. In 2004, the overall financial situation of Rhodia Group was in trouble. China Chemical seized this rare opportunity and contributed to the formal signing of the contract between the two parties on June 5438+ 10, 2006, which not only eased the financial shortage of Rhodia Group, but also enabled China Chemical to obtain a complete silicone business.
In an M&A transaction, there are several key time points, such as initial agreement time, formal signing time and formal delivery time. In the arrangement of delivery time, China Chemical mainly considers the maximization of commercial interests, rather than the "beautification" of financial statements at the end of the year, and tries its best to deliver at the beginning of the year. The control of delivery time by Kenos Company embodies the art of China Chemical Industry to seize the opportunity. Due to the M&A mode of no cash and no debt, China Chemical Company has realized the delivery within the scope of maximizing its own commercial interests and the tolerance of its opponents, taking into account the continuous factors of the technical transformation investment of Kenos Company.
Grasping these strategic opportunities at different levels is not only the concrete embodiment of Ren Jianxin's M&A art and experience, but also rooted in the strategic preparation of China Chemical Industry, both of which are indispensable.
Cultural integration in trade
In the literature of cross-border M&A in China chemical industry, there is only "cultural integration" but no "cultural integration". There is only one word difference between "integration" and "integration", but they embody completely different ideas and principles: the premise of integration is mutual respect and the two sides are regarded as equal relations, while integration reveals the momentum of "conqueror" Mergers and acquisitions are often regarded as "winners", but we must have a clear understanding of this: once we think that we are "winners", the success rate will be greatly reduced.
In an internal speech, Ren Jianxin once expounded the management mode of "harmony without difference": "harmony without difference" is to combine the traditional culture of "harmony" in China with our management mode. "Harmony" means seeking common ground while reserving differences, learning from each other's strong points, blending with * * *, sharing weal and woe, and making everything prosperous. Externally, it is the right way to make money by harmony, the harmony between man and nature that pays attention to health and environment, and the construction of a harmonious enterprise that strives for success without competition, seeks benefits without harm and dares to assume social responsibilities. "Different" means taking the differentiated road of introducing, digesting, absorbing, innovating and developing new chemical materials.
The cultural integration of China Chemical Industry is not limited to the post-merger, but runs through the whole process of the merger. This cultural integration before the transaction is one of the main contents of strategic preparation, which is mainly reflected in the exchange, communication and mutual recognition of the core figures of both sides. In three mergers and acquisitions, Ren Jianxin always personally received foreign visitors. While obtaining the dynamic information of the target company and key personnel, continuously introduce and spread the corporate vision and strategic intention of China Chemical. Ren Jianxin also invited each other to his home for many times, and established a good working relationship as well as a friend relationship with key personnel of both sides. It is the many details of the contact and exchange between the two parties before the transaction that laid the foundation for mutual trust.
Ren Jianxin said that M&A should not have the mentality of an occupying army, but should consider problems and arrange work from the perspective of the managers and employees of the merged enterprise, so that they can feel respect and equality of each other, thus winning the understanding and respect of each other. Therefore, after the merger, the operation of the enterprise can maintain the stability of personnel and business. In the vast history, every nation has formed its own proud culture and history, so it is very important to learn and respect the history and culture of each country and nation. We are "bosses" in asset relations and "teachers" in international operations.
Success lies in the overall organizational ability.
Why can China Chemical Industry form innovative strategic ideas and take effective strategic actions? What is the internal logic of the success of its transnational M&A strategy? We must go deep into the overall organizational capacity of China's chemical industry to find the answer.
Modesty of strategic entrepreneurs
Strategic entrepreneur is a new concept put forward by western academic circles, and its connotation refers to "combining entrepreneurship with strategic management ability". The essence of strategists is foresight, the core of entrepreneurs is innovation ability, and strategic entrepreneurs are both strategists and entrepreneurs. China's strategic entrepreneurial ability is mainly reflected in three aspects: entrepreneurial ability, industrial structure adjustment ability and transnational operation ability.
Ren Jianxin is a strategic entrepreneur. 1984, Ren Jianxin used a patented technology and borrowed 1 10,000 yuan to lead seven and a half people to set up "Blue Star Cleaning", which started the industrial cleaning industry and market in China. 1996 After its headquarters moved to Beijing, Bluestar Group began the restructuring of China's chemical industry, and reorganized more than 70 domestic chemical enterprises through various means of mergers and acquisitions. In May, 2004, China National Chemical Corporation was established based on Blue Star Group and Haohua Group, and 30 domestic enterprises were reorganized. So far, Ren Jianxin has had the experience of reorganizing 107 domestic enterprises. In 2006, the success of three cross-border mergers and acquisitions led by Ren Jianxin was not only the result of years of strategic thinking and strategic preparation, but also laid the foundation for a larger cross-border merger and acquisition of China Chemical.
Among entrepreneurs in China, strategic entrepreneurs with the above three abilities are rare. Besides Ren Jianxin, Zhang Ruimin is one of them. Other entrepreneurs either need to have a certain ability because of the characteristics of the industry, or only have two of the above three abilities at the same time, or seriously lack a certain ability.
On October 28th, 2007/kloc-0, 165438, Ren Jianxin gave a speech entitled "Three-Character Classics of Overseas Mergers and Acquisitions of China Chemical Industry" at Peking University. When the audience asked what was the primary factor for the success of cross-border M&A, Ren Jianxin's answer was only two words: "Modesty". Looking back on Ren Jianxin's achievements in starting a business for 24 years, we find that "modesty" is indeed his way to success.
The successful logic of organizational learning
International vision and basic ability formed by early internationalization experience. 199 1 In August, Bluestar Cleaning established a Sino-Japanese joint venture "Bluestar BC Cleaning Technology Co., Ltd." in Lanzhou, and set up a branch in Japan at the same time; 1April, 1992, bluestar cleaning established "bluestar-boromini cleaning technology co., ltd." in Kiev, Ukraine; 1October, 1993, 1 1, bluestar cleaning and American Meixi environmental group co., ltd. jointly established "American bluestar company" in Los Angeles ... These early internationalization experiences were lacking in many China enterprises, and their international vision and basic ability became the "gene" of China chemical multinational operation.
M&A and its integration ability based on domestic M&A experience. Since 1996 merged with Jiangxi Huo Xing Chemical Plant, by the end of 2007, Bluestar Group and China Chemical have merged and reorganized more than 100 production enterprises and received 24 scientific research institutes. Such large-scale, high-density and high success rate M&A activities have enabled Bluestar and China Chemical to accumulate rich direct experience and cultivate and train a large number of senior management talents with the ability of M&A integration.
It is difficult to ensure the success of cross-border M&A only by the above two factors, because today's environment is different from that of the last century, and there are also differences between domestic M&A and cross-border mergers and acquisitions. In this regard, China Chemical has hired world-class professional service organizations and experts to solve the problem. They brought professional experience and ability in cross-border M&A, and the close cooperation with China Chemical M&A team and the overall ability formed on the basis of complementarity became the key to the success of cross-border M&A. This is a kind of organizational learning. The experience of early international operation is "gene", domestic merger and reorganization activities are "foundation" and cooperation with first-class professional service organizations is "foundation". "Three bases in one" is the complete logic of China Chemical Cross-border M&A.
The sustainable way of organizational ability
No matter from the financial data of enterprise operation or value creation, China Chemical's three transnational mergers and acquisitions are successful, and some synergistic effects between three overseas enterprises and China Chemical are playing a role. From the perspective of enhancing the global market competitiveness of China Chemical, China Chemical still needs to continue its efforts, and its main aspect is organizational capacity building.
On June 5438+February, 2006, China Chemical and Yuanxun Company, the information technology service provider of Beijing Olympic Games, formally signed a cooperation agreement to start the information planning and construction project managed by the Group. China Chemical has organized a project team of more than 200 people (including more than 50 foreigners) to carry out the overall planning and design of information management on the one hand, and to be responsible for the project construction and implementation of several pilot enterprises on the other. In today's globalization and informatization, the construction of enterprise organizational capacity should not only continue to invest in the fields of production, marketing and management, but also invest heavily in the field of informatization to comprehensively enhance the overall organizational capacity of enterprises centered on informatization. This will be a valuable management innovation, which can give full play to the synergistic effect of cross-border mergers and acquisitions, and lay the foundation for China Chemical to form strong competitiveness in the global market.