In recent years, the number of incidents involving the acquisition of local brands by foreign companies has gradually increased. Some people think that this is an opportunity for the development of local brands, but some people see it as a “group wolf” attack. Is it a blessing or a curse? What is behind the scenes of M&A? Coke Xia Xinli hopes: We can calmly view this war without gun smoke so as to provide some constructive suggestions for the healthy development of local brands.

Foreign companies merged and bought local brands "Sima Zhao's heart"

Brand established nation. In the modern era, the brand is a symbol of national image and strength. In a certain sense, the acquisition of a Chinese brand by a foreign company is not a purely enterprise dispute, but represents the interests of the country in which it is located. Specifically, there are five main motivations for foreign companies to acquire Chinese brands:

First, open a safe passage into the Chinese market. Reducing or avoiding the symptoms of "acclimatization", and reducing a lot of trial costs, can safely and steadily enter the Chinese market.

Second, use various resources of Chinese enterprises. Such as Chinese companies in the domestic sales channel advantages, human resources advantages, complete production line, etc., M & A machine just got compensated.

Third, the purchase of assassinations eliminates competitors. First through official mergers and acquisitions, and then slowly restrict development so as to launch the market. Virtually to their own development to reduce their competitors, and even remove the biggest obstacles.

Fourth, the monopoly industrial chain gains initiative and high profits. Some mergers and acquisitions in order to improve their own industrial structure, the formation of a certain monopoly position, access to the initiative and the ultimate high profits.

Fifth, the expansion of the layout of the globalization strategy needs. Some international big brands continue to expand their territories on a global scale and eventually realize the strategic intent of globalization.

Seen on the table, such a strong cross-border mergers and acquisitions, for local brands, there are really some "wolf" strike.

The "three major factors" affecting the cross-border M&A of foreign companies

Whether a foreign brand's acquisition of a local brand can succeed or not, from the perspective of a local brand, depends mainly on three factors: brand value, government attitude, and consumer awareness.

Brand Value. This is a prerequisite for any merger and acquisition event. Foreign brands must value the value of local brands (see the above five motivations). What kind of brand can attract the attention of foreign companies? To put it simply, it is to "recognize redness." To have excellent products and certain market competitiveness; to have a greater influence in a certain region or the entire Chinese market; to have a sound sales channel; to have a certain market share; to have a greater market potential. As long as local brands have the above comprehensive features, they are likely to be “targeted” by foreign large companies.

Government attitude. Cross-border M&A is not simply a matter between companies. It requires the Ministry of Commerce to carry out approvals in accordance with relevant regulations before it can take effect. In each merger case, the government’s attitude is critical. In particular, when foreign companies offer attractive conditions, local companies and even the relevant departments of the country may not be able to resist temptation, but rather make decisions calmly. When national relevant departments conduct evidence collection according to the anti-monopoly law, they should try to obtain information and indicators that are beneficial to local companies. In the key links of mergers and acquisitions, the relevant state departments will play a decisive role. According to reports, some local governments are willing to let go of foreign companies’ high prices, and some even intend to promote the success of mergers and acquisitions. These are worthy of our so-called relevant departments to attach importance to the protection of good local brands. In this regard, the South Korean government has already set up a special agency in the early years to declare war on "transnational mergers and acquisitions" and it is worth learning from us.

Consumer awareness. In cross-border mergers and acquisitions, it seems that there is no direct relationship with consumers. In fact, this is not the case. Let's take the Korean auto industry as an example. Due to the strong support of the Korean government for the national industry, Korean cars have been truly cheap and good, at least in Korea. Increasingly Koreans’ interest in their cars has increased, but the desire for European and American cars is not particularly strong. Under such circumstances, the desire of multinational companies to realize monopoly or semi-monopoly Korean cars through mergers and acquisitions will hardly become a reality. Because of the Korean consumer psychology, authentic Korean cars are the right choice. In addition, Koreans have a strong sense of nationality, which means that there is an artificial barrier to foreign capital mergers and acquisitions. However, the Chinese people are not very confident in domestic goods, but there is an esteem mentality, which is intangible in the acquisition of self-confidence by foreign capital in acquiring local companies. Objectively speaking, the consumer's national consciousness needs a long process to cultivate and evolve, and it cannot be done overnight. Here, Coke Xia Xinli sincerely hopes that local brands should work harder. Please give us consumers some confidence, so that we can benefit others.

How do local brands retain their roots in the world's “group of wolves”? Will local brands hold them? Lenovo acquired IBM’s PC, Geely acquired VOLVO... Some Chinese brands’ cross-border M&A has made Chinese consumers’ morale soar. At the same time, some people suspect that this is just a phenomenon of “snaking things like elephants”, and some even say that local brands have spoiled the purchased brands. With painstaking experience, we must acknowledge the fact that Chinese local brands are not yet strong enough. Although there are many influencing factors in the face of cross-border mergers and acquisitions by foreign companies (refer to the above three major factors), the development of the brand itself is an internal cause and is the basis and core. No one can control other factors, but only when he is strong can he be deeply rooted in the foliage and be able to base himself on the world and move toward the world.

How can we make the brand itself stronger? "Brand Standing Theory" believes that a brand that can continue to develop must have three systems at the same time: product base, brand offense and defense, and consumer feedback. These three systems are relatively stable and aggressive as triangles, ensuring healthy, rapid, and sustainable development of the brand.

First of all, companies must make a good foundation for their products, including quality and innovation. In China, we often see some big brands have quality problems at the peak of development, and they are exposed repeatedly. This is a terrible thing. A good product is not equal to a good brand. If you can't even make a good product, how can you build a brand? If Steve Jobs's apples are constantly out of the question, how can Apple get the enthusiasm of global consumers?

Second, we must do a good job of attacking and defending the brand. What is offensive and defensive? That is, brand offensive and brand defense are the core of similar competing products. They create barriers for competing products and can also take the initiative to attack competitors, making it difficult for the other party to imitate in a short time. iPad computer upgrade products, it uses high-tech, humane features to face the general computer to PK, attacking ordinary computers. At the same time, the iPad strategically introduced more than 4,000 free children's learning software, allowing the consumer population to expand steadily. This is actually a defensive strategy. As long as it is an iPad user, more than 4,000 free softwares make it almost impossible for everyone to prevent it.

Finally, it is the consumer feedback system. Keeping abreast of customer information feedback will help improve the brand and collect information through advertising, surveys, and other forms. The system requires that all product sales channels can be used as feedback channels for consumers, and that the form of informed feedback must be diversified. General domestic companies do not value the interaction with consumers. Imagine that the ultimate buyer is the consumer, and the general consumer loyalty is not high, if not quickly and timely understanding of how consumers do brand? Does it take a long time to understand consumption? Each Apple product is not a wishful research and development, production, such as iPad's R & D process itself is a process of in-depth study of consumers, and in the entire process of launching the market, has always attached importance to consumer evaluation and recommendations for After the update of the computer software provided new ideas, this is Apple's great place.