There is a tendency for people to think Asia means China. Whilst the position of China in the world scheme of things is extremely important it is certainly helped by the region it sits in. Of the top ten most populous countries in the world six are Asian. It is no surprise that China and India sit at one and two in the population league table and both are growing GDP by in excess of 8%. But it may not be as widely known that Indonesia is the fourth most populous nation and posted GDP growth in 2011 of 6.5%. So Asia is a region made up of big countries which are in many cases growing considerably faster than in the west. And one of the significant changes over the last few years is how trade within Asia has cushioned the region from the full effects of the financial crises in the west.
Nevertheless HSBC Global Research still describes China as “Asia’s growth engine” citing the fact that with the exception of Vietnam every major Asian country has seen exports (as a percentage of GDP) to China jump whilst exports to the US and the EU have either stagnated or fallen dramatically. Does this importance to the region coupled with the rumblings of property bubbles and a banking crisis on the horizon spell danger for the region? Well at the moment it seems not. Chinese manufacturing is increasing and the government is thought to be about to revert to a package of measures to encourage growth. Whilst the most recent reports are about the “growth in exports slowing” a reader has to be careful to read that phrase carefully. It is still growing but just less quickly.
The drive for Chinese companies to be looking beyond China is obviously more vigorous whilst the home markets are providing healthy foundations from which to expand but to some extent will continue whatever is happening to the Chinese economy. The impetus comes from two factors: the huge amount of foreign reserves sitting in China and the need for resources whether they be oil from Africa or R&D skills from Europe. The acquisitive Chinese corporates largely fall in to two categories. The first, state owned or ex state owned enterprises, tend to be guided by government as to what acquisitions they make and they tend to fall in to favoured sectors such as infrastructure or natural resources although the sector which are favoured do change. Second there is the new breed of Chinese entrepreneurial company whose acquisition strategy is much more familiar to western corporates. They are after technology, brands, sales channels and expertise – whatever will lead them to be world leaders in their particular fields. Think Lenovo’s acquisition of IBM’s PC business or the Chinese acquisition of Lanvin, the fashion brand.
There is no particularly special way in which a Western company can make itself more attractive to a Chinese or other Asian investor. But once interest is expressed the key is to get culturally sensitive support immediately. Deals are done differently in Asia and you need to give yourself the best chance of getting to a successful conclusion.”