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China Briefings

Reports on China issued by Samsung Economic Research Institute

China Business Intelligence No. 6

China Business Intelligence No. 6

Samsung Economic Research Institute Beijing Office

Nov. 3, 2006

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Highlights

I. Chinese Enterprises Painful M&A Integration Abroad

  1. CEC's acquisition of Phillips cellular phone unit raises issues over Chinese enterprises ability to successfully integrate overseas unit after acquisition.
  2. Previous examples such as BenQ's acquisition of Siemen's mobile device division as well as TCL's acquisition of Alcatel serve as harbingers of future difficulty.
  3. The keys to successful integration are divided between tangible and non-tangible assets. The integration of employees and products represent tangible implementation. While the integration of corporate culture and customer loyalty is the main challenges for non-tangible assets.

II. Korea's Exports to China Slows Down

  1. After several years of fast growth, Korean exports to China have noticeably decelerated in the first seven months of 2006.
  2. Deceleration in exports are due to several reasons including (1) the changing pattern of China's foreign trade; (2) slowdown in Korea's export of parts and materials to China; (3) slower foreign demand by China; and (4) slowdown of China's imports
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