Monday, January 25, 2016

Is a Chinese Takeover Good or Bad for Your Job?

By Philips Chair in Strategy and International Business and Co-Director of CEIBS Centre for Globalisation of Chinese Companies Klaus E. Meyer

When a company is taken over by a foreign acquirer this usually triggers a lot of anxiety in the workforce. The new owners will likely want to restructure the firm in some way to get value for their money. Some aim to drive up productivity by cutting slack, and for employees this spells job losses. Private equity investors typically fall into this category. Others aim to realize synergies between their existing and the newly acquired operations and this is especially bad news for middle management as a merged company rarely needs two headquarters and two sales organizations. A company that makes an acquisition within the same industry most likely pursues this type of 'synergy potential' approach.  

But are there any differences when it's a Chinese company making the acquisition? What should employees expect when their company is taken over by a Chinese firm? When Munich machine tool builder KraussMaffei was taken over in January, the media reported that the workforce celebrated the news. Why were they so happy? Overall, the strategies used by Chinese companies acquiring businesses abroad have become more diverse in recent years; but in many cases, there are good reasons for optimism. Read more on Forbes.