Overseas investment is a high-risk business, and companies should establish a clear understanding of the risks in the selection of investment projects and M&A business.

Among the various risks, political risks, Chinese companies, especially the tests that Chinese companies in the United States and Europe must withstand. Lenovo mergers, mergers with Haier, and CNOOC, acquisition projects of a slightly larger scale are often necessary as long as the acquirer is a Chinese enterprise, and some American politicians have touched the nerves of "national security." It can be said that banning Chinese companies from getting involved in important industries in the United States overwhelms the so-called market economy. The US government has always advocated the principle of fairness.

In addition, the methods of cross-border mergers and acquisitions of Chinese companies also need to be improved. Generally speaking, in addition to certain political risks, Chinese enterprises' overseas mergers and acquisitions also face three risks:

First, the threshold is high and competition in foreign markets is becoming increasingly fierce; BR />

Strong diplomatic supervision;

Transparent information disclosure of overseas listed companies to the public at any time, the company's operations, while domestic companies have not done enough in this regard.

In the case of CNOOC’s acquisition of Unocal, we see that it is far from that simple. Although Chinese companies make serious efforts to act in accordance with Western standards of corporate governance and M&A rules, the ends and means are very transparent but the results are exactly the opposite. Studying its origins, in addition to political resistance, Fu Chengyu, chairman of China National Offshore Oil Corporation, believes that simply applying Western rules ignores the needs of China and Chinese characteristics. Therefore, it is necessary to improve the level of domestic corporate governance, but also to reasonably use various means (including legal, investment psychology, promotion) to achieve the purpose of cross-border M&A, but it also needs to rely on more Chinese enterprise practices to answer questions . Of course, in order for Chinese enterprises to improve their overseas M&A capabilities, they also need to find ways to obtain the maximum return on investment and merge and acquire at the minimum cost. Domestic production and academia must work together to discuss and research.

The "World Economic Yellow Book" also reminds that the purpose of integrated M&A is not to enable Chinese companies to do a good new job. There may be many reasons for the failure of corporate mergers, such as overestimating the market potential before the merger, neglecting the role of due diligence, and overemphasizing sound financial statements, etc. For many M&A cases, poor post-M&A integration is the most fundamental reason for failure.

For example, in the 2005 semi-annual report, after a generous acquisition of overseas businesses, BOE and TCL announced that the two companies had incurred huge losses, including a loss of nearly 1 billion US dollars for BOE and TCL. $700 million in losses. The lesson learned from these two companies is that it is not difficult to find overseas mergers and acquisitions to quickly expand the scale of the company, but it should be the old saying: big is not necessarily strong. After the acquisition is completed, the two companies will integrate all aspects of the acquired company's brand, technology, production and corporate culture. Weak integration has directly led to overseas operating companies being in dire straits, being dragged into the quagmire of losses, and will become parent companies.

Therefore, overall, overseas investment by Chinese enterprises is an inevitable trend, but specifically for enterprises, the unrealistic pursuit of leapfrog development does not have a certain amount of international investment experience. The risks will be huge.

Each enterprise's own conditions, environment, industry and strategic enterprises implement "going out" in different styles and methods and means to create various effective and unique overseas investment models.

The overseas investment model of establishing marketing channels

The investment model of establishing overseas marketing channels refers to the overseas investment of some Chinese enterprises not for the purpose of establishing production bases or R&D centers in the host country, but It is necessary to establish its own international marketing agency, establish its own overseas sales channels and networks, sell products to overseas markets, and reduce intermediate links to improve the profitability of the enterprise. According to statistics from the Ministry of Commerce, as of the end of 2003, foreign trade enterprises accounted for 55% of the total number of foreign-invested enterprises. Trading enterprises have a considerable number of overseas marketing agencies that sponsor domestic enterprises. This shows that so far, the most important model of overseas investment by Chinese enterprises is the investment model of establishing overseas marketing channels.

The overseas investment of Sanjiu Group, China’s largest pharmaceutical company, basically follows this model.

Sanjiu Group's production base and R&D center, domestic and overseas companies and other marketing agencies. Sanjiu Group was established as a marketing company in Hong Kong, Russia, Malaysia, Germany, the United States, South Africa, Singapore, Japan, the Middle East and more than a dozen countries and regions since 1992. Thanks to these marketing companies, Sanjiu Group is responsible for consumers overseas and has about 39 products in these countries and regions, which is the important window to develop the overseas sales market of Sanjiu products. With the growth and development of overseas marketing companies, Sanjiu Group's products in the market have gradually evolved from a single domestic market to a global market. In addition, overseas investment enterprises in Fujian Fuyao Group, Tianjin Tiens Group, COFCO Group, Sinochem Group and Technology Group are the main enterprises to establish overseas marketing networks, and also belong to the investment model of establishing overseas marketing channels.

Judging from the current situation, the establishment of overseas marketing channels by Chinese enterprises has its advantages and limitations. It has the following advantages: First, enterprises reduce intermediate links and sell products directly to overseas markets by establishing their own Sales channels to overseas target markets and expand export scale. Under this model, not only can you directly expand the export cycle and obtain huge profits through direct control of overseas sales, but also directly obtain market information. The practice of domestic production and foreign sales is attractive to Chinese enterprises over a long period of time, resulting in products produced in China with labor and other factors that may remain sufficiently internationally competitive for a long time. For some enterprises, establishing overseas marketing channels, a good overall consideration of their imports and exports, domestic and foreign markets, taking into account the resources used domestically and internationally, and the implementation of their global development strategies, both to promote exports is also a good idea Opportunities to find profitable imports for truly international operations. Fifth, from a macroeconomic perspective, it can also be exported, which can help the country and solve the employment problem of a large number of labor forces.

At the same time, there are certain restrictions for Chinese enterprises to establish overseas marketing channels. This investment model, sales, production, procurement and R&D do not go abroad, and are therefore easily restricted by various trade barriers, including anti-dumping. , Therefore, enterprises need to correctly enhance their capabilities to cope with this aspect.

Therefore, the competitive advantages of abundant labor resources and complete production supporting facilities are made in China. Chinese enterprises should fully pay attention to and make good use of this advantage to build domestic production bases and sell products overseas. A comparative analysis of the pros and cons of companies selling their products directly in overseas markets, or selling indirectly through intermediaries. If a small-scale enterprise is exporting and has just started to enter the international market and lacks experience, entrusting an intermediary company to export is also an option. Enterprises should actively consider establishing their own overseas marketing network and controlling a certain export scale and financial strength to increase awareness of the direct sales market, meet foreign consumers directly, reduce intermediate links, and expand profit margins.

Overseas processing trade investment model

The overseas processing trade investment model means that our enterprises establish overseas production and processing bases, and the processing and assembly businesses bring their own equipment, technology, Investments in raw materials and spare parts are mainly made into finished products and then sold or re-exported to other countries and regions to stimulate and expand the processing and assembly of domestic equipment, technology, raw materials and parts for export. The overseas processing trade investment model is suitable for the requirements of China's economic structural adjustment. In recent years, it has increasingly become an important way for enterprises to invest overseas. As of the end of December 2003, according to statistics from the Ministry of Commerce, the number of records approved by the Ministry of Commerce and processing trade enterprises to be established overseas reached 490. When domestic enterprises carry out overseas processing trade, the main technologies are mature and there is excess production capacity in the textile, clothing, home appliances, light industry, machinery and API industries.

The scale of overseas processing trade and investment of Huayuan Group in recent years has approached US$300 million. Huayuan Group has played a demonstration and leading role. Born in Pudong New Area, Shanghai in 1992, it is a leader in the textile industry. A large state-owned enterprise group that is my country's pillar industry. In the late 1990s, China's textile industry was facing a shrinking domestic market and overcapacity, and continued to be restricted in the international market by trade barriers in the form of export quotas and safeguard measures.

Then the internal and external environment, Huayuan Group abandoned the traditional approach, relying solely on exports to occupy overseas markets, and developed another way of overseas processing trade, investing in overseas production and processing bases, Tajikistan, Canada, Mexico, Niger, Thailand and reasonable rules of origin can effectively bypass foreign trade barriers, avoid anti-dumping, expand overseas markets, promote the development and expand the export of domestic equipment, technology, raw materials, and parts. Huayuan Group was established, two textile companies taking advantage of the textile trade area member states of Mexico and Canada and in the production of cotton yarn or fiber under the North American Free Trade Agreement, enjoying tax-free, quota-free preferential policies, expanding in North America, especially Export of cotton yarn and fabric products.

In addition, foreign-invested enterprises in Shenzhen Konka Group, Zhuhai Gree Group and Jiangsu Chunlan Group are mainly overseas processing trade investment models.

The characteristics of the overseas processing trade and investment model are the two interactive interactions of investment and trade, with the foreign economy and trade business interacting with the domestic economy. The first interaction is driven by foreign investment and export promotion, and the second interaction is driven by foreign investment and exports to accelerate the adjustment and optimization of domestic industrial structure. The main purpose of these investments is to open up foreign markets to stimulate exports and optimize the structure of the domestic industry. The second feature is the overseas processing trade investment model

The main way for enterprises to carry out overseas investment, establish overseas production bases, carry out processing and assembly business, and use their own equipment, technology, raw materials, and spare parts Investments are mainly made into finished products that are then processed and assembled for sale or re-export to other countries and regions.

Enterprises with this investment model generally industrialize the mature technologies of textile, clothing, home appliances, light industry, machinery, pharmaceutical raw materials and other production enterprises with excess domestic production capacity. Investments are mainly concentrated in Asia, Africa-, Latin America, the former Soviet Union, Eastern European countries and other developing countries and regions. The conditions for enterprises to carry out overseas investment are enterprises with domestic overcapacity and their products in foreign markets.

When enterprises adopt overseas investment in overseas processing trade, the main advantages of mature technology, equipment and overcapacity can be transferred to countries and regions with better market sales, so that enterprises with overcapacity can continue to play their role and Keep getting. Secondly, based on this investment model, using domestic technology, equipment, raw materials, parts and components, such as in-kind investment, plus a small part of the foreign exchange fund, can save foreign exchange expenditures and meet the actual needs of some enterprises. Third, enterprises adopting the overseas processing trade model to carry out overseas investments can also use rules of origin to effectively avoid various trade barriers and breakthroughs and expand overseas markets.

There are two basic conditions for overseas investment enterprises to adopt the overseas processing trade investment model: first, the foreign market prospects, technical equipment and production capabilities are relatively mature.

Third, the overseas investment model of creating independent brands

The overseas investment model is to create independent brands. In the process of overseas investment, some companies adopt greenfield investment or cross-border M&A investment. We insist on establishing our own brands around the world, rely on long-term commitments, cultivate independent internationally renowned brands, and rely on consumers to recognize our brands to develop overseas markets.

This model is represented by Haier Group. The core goal of Haier Group is to always create a world-leading independent brand in the process of overseas investment and transnational operations. As early as the 1980s, Zhang Ruimin, general manager of Haier Group, launched Haier's "world-famous brand" strategy. After Haier fully implemented the internationalization strategy in 1998, Haier internationalized Haier, and the Haier Group became a world-famous Chinese brand. .

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Haier Group’s overseas investment enterprises insist on branding, Haier, the Chinese investor Haier, the company name of Haier, and the products produced and sold are Haier brands. From this perspective, overseas investment not only means Haier's occupation of the international market, but also a more effective way to create a world-famous Haier and give it a new role and significance in overseas investment.

Haier made a "difficult" decision on strategy to create an overseas model of the brand: Haier entered the international economic arena for the first time, and in developed countries and regions such as Europe and the United States, quality was the most important, and it relied on local consumers to recognize Haier's brand and achieved success. Local famous brand status, and then relying on the potential of brand advantages in a strategically favorable position, Haier implemented the "trinity" localization strategy of design, production, and sales in the United States and Europe, precisely to establish a localized brand image in Europe and the United States, thereby entering developing countries. Let Haier become world famous. Haier's goal of achieving a localized rise of a world-famous brand name in the world is becoming a reality. On January 31, 2004, the "100 Most Influential Brands in the World" report prepared by the World Brand Laboratory, the world's top five brand value assessment results show that the Chinese mainland Haier Group is a choice, ranking 95. < /p>

The main characteristics of the overseas investment model of independent brands are very obvious. Overseas investment, whether through greenfield investment or cross-border mergers and acquisitions, one of its core goals is to create the world's leading independent brands. The second is to adopt the strategy of "hard first and then easy", which has two meanings: that is, it is difficult to adopt a simple strategy for enterprises to enter the international market. For example, Haier was the first to enter the international market in Europe and the United States. In the economic field, developed countries and regions that value quality internationally rely on local consumers to recognize the Haier brand to enter developing countries. Relying on brand advantages and the brand's local status, the model adopted is to create its own high brand positioning. Enterprises in the early stages of cross-border operations are destined to go through a long and difficult period. After that, enterprises that put consumers' brands first carry out overseas investments to solve the difficulties, first develop the plants, and then expand again to developing countries. Awareness, understanding and recognition can open up situations. Second, the first market is followed by factory construction. For example, Haier's first independent brand product enters overseas markets. Consumers in other places recognize Haier's brand export and then invest in building factories to occupy a certain market share.

The advantages of the first such overseas investment model "profound knowledge" type, the independent brand model of overseas investment from humble beginnings has its advantages and limitations. Success or failure, but once you want to create a well-known brand and face greater risks in the world, you can invest and produce internationally at the high end of the industrial chain, you will be able to obtain excess profits, and foreign multinational companies can no longer work, thus laying a solid foundation. The foundation for international operations and long-term development of enterprises. Secondly, the model will establish a unified private brand and localization strategy, combining the two, for example, to adapt to the different needs of markets in different countries and regions, Haier adheres to the premise of unified local development of its own brand Strategy, realize the "trinity" of design, production and sales.

Judging from the conditions of the overseas investment model, this is quite challenging. First of all, it requires the company to have abundant funds and strong management capabilities, and the brand to have a certain degree of influence and popularity. It also requires domestic investment enterprises to be familiar with local market conditions and domestic and foreign professionals to successfully establish and manage the brand. There is a certain degree of difficulty for companies everywhere to establish overseas brand names and work harder to build their own brands. The local shape of a brand that has not yet been established and builds it into a well-known brand makes it even more difficult. This requires domestic investment companies as a starting point. Under the current circumstances, most Chinese companies do not meet these conditions. Secondly, this overseas investment model is costly and risky. Internationally renowned brands do not develop overnight. After decades or even hundreds of years of accumulation, long-term brand investment is required. It should be said that the value of a brand is actually the return on investment of the brand. Overseas enterprises not only invest in production, but also input brands. With double input, short-term benefits will definitely be affected

When Chinese enterprises participate in international market competition, we must pay attention to cultivating a number of internationally renowned independent brands. Brand reflects the quality, reputation and image of an enterprise. To a certain extent, it is also a symbol of a country's comprehensive national strength. The elements that make up a brand are competitiveness. A good brand means the creation and development of competitiveness. The brand is a long-lasting enterprise and one of the most effective means to maintain the vitality of the market. A company's entry into the international market, no matter in what way, should be regarded as the entire central idea of ??creating the company's own brand.

There is a certain intensity in developing an international brand strategy that domestic enterprises need to implement into a multinational company. They need to insist on investing overseas with their own brands in order to gain an international reputation with competitive advantages, establish their own brands, and form an international brand.

4 Overseas M&A Brand Investment Model

The investment model of overseas M&A brand is a way to create your own brand. The investment model is very different from the investment model and overseas. It is through mergers and Acquire well-known foreign brands, and their brands influence overseas investment models to develop local markets. The main features of this model are first, RTO, which acquires the "shell" of a well-known foreign local brand, and then through the product packaging of the "shell" to access or restore the identity of a well-known brand to local consumers, quickly enter the local market . Overseas companies that are poorly managed or bankrupt still have certain influence and sales channels because mergers and acquisitions are ready, so under this model, there is no need for the time and cost of overseas brand building and brand promotion. Third, it is a model suitable for large-scale enterprise acquisition and management capabilities with a certain capital base, good reputation, and well-known foreign brands.

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The model of overseas brand acquisition has become a unique model in TCL Group’s overseas investment. In September 2002, TCL International Holdings Co., Ltd., a subsidiary of China's TCL Group, acquired the 113-year-old, based in Germany and Europe through its newly established wholly-owned subsidiary Schneider Electronics Co., Ltd. (Schneider Electronics) It has a wide range of century-old stores and is known as one of the "three major national brands in Germany". Schneider Electronics Co., Ltd.'s main assets include the exclusive trademark rights of "SCHNEIDER" (Schneider) and "DUAL" (DUAL) and other well-known brands. TCL Group, In July 2003, German Schneider spent millions of dollars to indirectly acquire the famous home appliance company Govedio. This acquisition is a wholly-owned acquisition of Govedio, a VCR, DVD, and video channel company. With annual sales of approximately more than 2 million US dollars, TCL Group still plans to continue selling products such as color TVs and washing machines using the Gvidio brand in the US market, and strive to expand its market share in the United States. To expand the brand into overseas markets, TCL Group has developed a unique overseas marketing strategy.

The most important advantages in international competition are cost advantages and product advantages, and the worst is the brand advantage through acquisitions abroad. The overseas investment of some well-known brands will make up for our own shortcomings in the long term, and the combination of advantages in the three aspects will help improve the competitiveness of Chinese enterprises in the international market.

The export of five overseas brands. Investment model

The overseas brand export investment model refers to our unique brand advantages for enterprises to carry out overseas investments without investing too much money, and adopt franchises in the form of equity joint ventures or other means. Expansion of chain operations. This model of overseas investment by Chinese enterprises is one of several typical Beijing Tongrentang.

The 330-year-old Beijing Tongrentang has become a modern large-scale tradition. A Chinese pharmaceutical enterprise. The Tongrentang brand is world-famous at home and abroad. As a well-known Chinese trademark, its brand has the unique advantage of being reestablished in more than 50 countries and regions in the world, and is the first in the mainland. The trademark was registered in Taiwan, and Tong Ren Tang's products have been sold to more than 40 countries and regions around the world. Tong Ren Tang has more than 300 retail and franchise pharmacies in China, and established overseas companies or pharmacies with 10 or more people in 2002. The largest export of Chinese enterprises in 2017. It is obvious that the well-known brand, Tong Ren Tang Group, has become a unique advantage in its overseas investment, whether it is a shareholding in other brands, a joint venture or a sole proprietorship, a franchise, or a chain. Note that "Tong Ren Tang" is the flagship of the old Chinese overseas export and expands overseas markets. In the previous analysis, Haier Group, an independent brand created by the overseas investment model, is "going". Create the side of brand activities, while the former is out to "walk" more mature brands at home and abroad.

The prerequisite for using this model is that the company must have a well-known brand and independent intellectual property rights, which is the "weakness" of most Chinese companies.

Therefore, most Chinese companies do not have the conditions to adopt this model. However, as the pace accelerates in the process of Chinese companies creating famous brands, I believe that this model will gradually become popular after a period of time, because many foreign multinational companies investing in China have adopted this model to enter the Chinese market. Generally speaking, China obviously lacks those that are famous in the world, but in the Chinese traditional medicine and Chinese food industries, some companies have independent intellectual property rights and well-known trademarks, and have core competitiveness in the international arena. In transnational operations and overseas investments in these industries, we must pay attention to independent brands that give full play to comparative advantages and competitiveness, and strive to make the enterprise bigger and stronger, which has become the unique characteristic of Chinese industrial multinational companies.

Overseas asset M&A model

The so-called overseas asset M&A model means that the overseas acquirer of a Chinese enterprise purchases all or the main assets of the target enterprise, or acquires some of them, in order to achieve The number of shares in which it controls or participates in its investment activities. Target companies acquired by Chinese companies generally do not bear the debts and possible compensation of the target company and only bear the assets and business of the original target company. In April 2000, Wanxiang Group's overall acquisition of the American Scheele Company was an overseas asset acquisition model, such as the Italian refrigerator manufacturer Haier Group's acquisition of Beijing Oriental Electronics Group's acquisition of Hyundai Electronics, China National Offshore Oil Co., Ltd., Medium Co., Ltd. and Switzerland , Spain's Ipsos invested more than 20 billion US dollars in partial interests in five oil fields in Indonesia, China National Petroleum Corporation acquired assets in Indonesia, China Netcom (Hong Kong) led the acquisition of Asia Global Crossing Network's oil Henan natural gas field assets, Holley Group's acquisition of Philips' CDMA mobile communications unit in San Jose, Shanghai Soap Making Group Co., Ltd.'s acquisition of SPS and Polystor in the United States, and rechargeable battery production asset projects also fall into this type of investment model.

The Scheele Corporation, founded in 1923, is one of three partial production suppliers to the U.S. automobile market. As early as 1984, Scheele placed an order for Wanxiang Universal's total of 30,000 units, and GM parts production began on the road. Wanxiang's products sold in the U.S. market are all labeled with the "Schele" trademark. Starting in 1994, Scheele's business began to decline due to increasingly fierce market competition and internal decision-making errors. Later, Scheele took the initiative and made widespread requests for acquisitions. As a result, GM spent US$420,000 to acquire major assets such as brands, technology patents, special equipment and market network Scheler Company, and factories and equipment were purchased by another company. The most direct impact of the acquisition is of far-reaching significance, "Scheleer's general increase in annual sales in the US market to at least US$5 million." Scheler, General Products due to the acquisition of local brands, technology and production base support.

The goal of mergers and acquisitions of assets for overseas investment is to avoid passing on the original claims and liabilities to our companies. Therefore, for overseas investments, mergers and acquisitions, our companies consider that overseas target companies may have debts that are not yet clear, compensation resulting from the completion of the transaction may be provided to others, and asset acquisitions are guaranteed. In addition, in mergers and acquisitions of assets, as long as the target company's assets are sold in favor of a quorum of shareholders, the acquisition can be carried out, even if the target company has a minority shareholder who wants to block the actual acquisition without affecting our business.

Such limitations first, as more and more cash acquisitions are made, it requires us to invest more working capital. After the merger and acquisition of Chinese M&A business target companies is integrated, in order to achieve the purpose of overseas mergers and acquisitions, they should have strong management capabilities and integration talents. Any omissions in mastering the target company's debt, tax and legal procedures, as well as aspects of mergers and acquisitions, may create a trap that limits the target's mergers and acquisitions.

The main international direct investment is corporate mergers and acquisitions, rather than new investment (or greenfield investment), so it should be said that the overseas asset merger and acquisition model is currently a more popular overseas investment method. In addition, the transaction objects of asset acquisitions are a large number of unlisted companies, and listed companies are, after all, only a small part of overseas enterprise groups. Therefore, this model has a broader application space than the model based on the overseas equity mergers and acquisitions model, and provides a broad range of applications. Small and medium-sized enterprises are more suitable. With the expansion of scale, China's overseas investment and M&A investment will increasingly become an important way for enterprises to invest overseas and asset acquisition models will have more choices for enterprises.