Selling to Chinese Firms: A Seller’s Perspective. Empirical Evidence from the German Automotive Industry

Abstract

Purpose

The chapter looks at two recent acquisitions by Chinese companies of German firms operating in the automotive sector. In both cases it was the target firm that initiated the process, intentionally selling to a Chinese strategic investor. The main purpose of the chapter is to examine the main motivations that induce developed country MNEs to deliberately search for a buyer in China.

Methodology

The chapter uses a case-study approach. Interviews were conducted with the managers that followed the entire process of sale and who were responsible for the search and the selection of a strategic investor in China.

Findings

Empirical findings show that major drivers in opting for Chinese investors are the potential synergies generating from resource redeployment, the ability of the acquired firm to maintain its autonomy and the opportunity to expand into the Chinese market.

Research implications

The cases analysed show that developed country firms may take a proactive role in China in order to address their institutional-based disadvantages and to reduce and eliminate the liability of foreignness they may confront there. What is important is strong core competitiveness on their side, which can ensure their operational autonomy, such as technological leadership and superior quality and solid development. The policy implications are relevant, because in the current particular situation where many companies in Europe turn for sources of capital to emerging market firms, Chinese investors can facilitate target companies’ growth, with a positive impact for the local economy.

Citation

Gentile-Lüdecke, S. (2014), "Selling to Chinese Firms: A Seller’s Perspective. Empirical Evidence from the German Automotive Industry", Multinational Enterprises, Markets and Institutional Diversity (Progress in International Business Research, Vol. 9), Emerald Group Publishing Limited, Leeds, pp. 71-96. https://doi.org/10.1108/S1745-886220140000009003