Connecting with China The scale of China in geography and number of businesses is huge. For example, there are more than 45m businesses, many in cities the west has hardly heard of, so it’s no easy task to find strategic partners even if you do speak Mandarin. And this is why digital technology has become so important in China, it’s powering the B2C retail revolution and is just as important for B2B. If theres one thing the Chinese are, it’s connected, so the best way to communicate effectively for both parties is through an online to offline digital platform. The beauty of a digital tool is that it’s possible to automate the first stages of matchmaking in each partys cultural environment, which makes it easier and helps alleviate the fear of the unknown.
What you get out of it A new source of investment, revenue growth from access to more than 1.2bn consumers and the realistic possibility of minimal change to existing corporate governance are advantages that shouldnt need too much explaining. The economic growth in China is slower than it has been in the past, but this year will still be similar to adding an economy the size of the Netherlands to the G20. Of course in Europe were much more familiar with working with European, US or western-focused businesses from Asia. In most cases businesses either know, or can predict, exactly who potential investors or buyers might be. And can probably describe in detail what post-merger integration will look like. So it’s understandable that when a Chinese business theyve never heard of, that might even be operating in a totally different industry, shows interest in investing or acquiring them. There can be surprise and hesitation to take it seriously. Especially as the courting process can seem difficult to understand. We have probably all heard stories of Chinese fact finding visits that seemingly were not focused on anything concrete. Equally we can hear frustration from China that European businesses dont always support their need to build understanding and confidence in what is still a very radical decision to invest overseas. Were as unknown to China as China is to us. Today only a small, but increasing, number of Chinese businesses are making overseas investments and already China is on track to be the biggest source of M&A in 2016. I say that looking towards China isnt a brave or risky decision, it’s an intelligent, highly rational decision that combines access to a massive, fast-growing new consumer market with access to a brand new source of funds. Sure, there are a few more factors to manage than if you take the predictable option, but the predictable option just cannot compete with the upside in business value that success in China will bring, today and in the long term.
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