“Chinese Dealocracy”
In a bylined article in the December 15, 2008 issue of The Deal, Booz & Company’s Andrew Cainey (China) and Gerald Adolph (North America) argue that the keys to a successful business transaction in China rests with both parties’ ability to work through challenges such as building trust, overcoming cultural differences and maintaining clear communication. “When dealing with a Chinese buyer, it is critical to understand exactly what type of transaction is being considered,” write Cainey, a Senior Executive Advisor for Booz & Company in Greater China, and Adolph, a U.S.-based Senior Partner who leads the firm’s Mergers and Restructurings group. “In contrast to U.S. buyers, Chinese acquirers typically are not interested in gaining control of the target. While more popular today, outright acquisitions still remain by far the minority of outbound Chinese deals.” In light of cultural differences, a lack of familiarity and the sheer novelty of some transactions, the authors write that “a greater premium on communications between the two entities themselves to customers, employees, regulators, governments and other stakeholders” is needed, all of which “requires close attention to concerns of different stakeholders as well as a detailed, well-coordinated plan to address these concerns.”