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Deloitte Consulting Advises on Thomson Reuters White Paper on Globalization
Thomson Reuters recently launched a white paper on the opportunities and challenges facing the Chinese enterprises when going global. Based on cross-industry data and business intelligence, the report provides in-depth analysis on the risk and challenges for the Chinese enterprises in their globalization process involving legal, political, financial, taxation, intellectual property rights issues, and etc. According to the report, overseas M&A represents the most important force in Chinese enterprises' outbound investments and lack of overseas investment experience has become the biggest 'bottleneck' in their "going-out" endeavor.
Robert Hah, Deloitte China Consumer Business Consulting Managing Partner was invited by Thomson Reuters to give recommendations to the Chinese enterprises when making outbound investment. Robert shared Deloitte's perspectives in this area with a focus on the challenges and key opportunities, considerations and also post-merger management and integration. He said when developing overseas investment strategy, companies should first conduct a comprehensive analysis of their existing domestic and overseas businesses, their competitors, the upstream and downstream sides of the industry, to identify weaknesses and areas for improvement. In the meantime, outbound investment needs to be targeted and there should be a clear and predictable financial returns in mind and also make sure the risk is controllable.
To prepare for "going-out", Robert suggested companies to work on the following:
- The overall planning of globalization and detailed action plan
- The establishment of operation model
- The build-up of talent pool and incentive mechanism
- Leveraging the third-party services firms and business partners
Going global in some sense means to accept the global standards, understand local regulations and cultural differences, which are the main challenges for Chinese enterprises when "going out". Robert said that "cultural integration" is the most critical but is often neglected area during the actual execution. In the "Deloitte 2014 M&A Trend Survey" , 2,500 executives were interviewed and most of them cited "cultural integration" as the second most important task, right after "retaining customer".
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