Survey on Activities of Swiss Manufacturing Companies in China with special focus on M&A

Diplomarbeit von Juergen Simon, Chun Shi Xu

Summary:

Throughout the past three years, China has become the number one country for investment, attracting more foreign direct investment than the USA. New laws allow foreign companies to acquire Chinese enterprises.

Through telephone interviews the authors collected information on the current activities and future plans of 37 Swiss manufacturing companies in China. How do traditionally export-oriented manufacturing companies see this situation? What are their strategies? Do they consider Mergers & Acquistion (M&A) as a strategic option?

The paper shows the results of a survey on the China activities of Swiss manufacturing companies up to 4000 employees, conducted by two students of the University of Applied Sciences Northwestern Switzerland in 2003.

Table of Contents:

	LIST OF GRAPHS	I
	ACRONYMS AND ABBREVIATIONS	II
	ACKNOWLEDGEMENTS	III
	EXECUTIVE SUMMARY	IV
	INTRODUCTION	1
1.	Goal of the survey	1
2.	Structure of the paper	1
I.	GENERAL PART	3
1.	Foreign Investment Forms in China	3
2.	FDI - New way to introduce Foreign fund in China	5
3.	Definition of Mergers & Acquisition (M&A)	6
4.	Competitiveness of Manufacturing Industry	7
4.1	Home base - Switzerland	7
4.2	Manufacturing Industry in China	8
4.3	Trade of the Swiss manufacturing industry with China	9
II.	SURVEY PART	12
1.	Methodology	12
2.	Sample Profile of Swiss Manufacturing Companies	14
2.1	How we defined our sample	14
2.2	Definition our sample companies	15
2.3	Profile of the interviewed companies	15
	SURVEY A - INDUSTRY OVERVIEW	23
1.	Legal forms	23
2.	Importance of the business in China	25
3.	Business activities in China	25
4.	Years active in China	26
5.	Profitability of investment in China	28
6.	Expansion plan in China for the coming 5 years	28
7.	Summary of Survey A - Industry overview	31
	SURVEY B - CHINA STRATEGY	32
1.	Consulting	32
2.	Market entrance	34
3.	China Strategy	34
4.	Overall corporate strategy: IR-Grids	47
5.	Business experiences in China	53
6.	Summary of Survey B - China Strategy	56
	M&A AS A STRATEGIC TOOL IN CHINA	58
1.	Attractive manufacturing industries for M&A	58
2.	Worldwide M&A experience	59
3.	Reasons against M&A in China	60
4.	Reasons for M&A in China	62
5.	Requirements for M&A in China	64
6.	China strategy of M&A experienced companies	66
7.	Recommendations for M&A in China	70
8.	Summary of the M&A focus part	72
III.	COMPARISON TO SOUTHERN GERMANY	74
IV.	CONCLUSION	77
	BIBLIOGRAPHY	80
	ABOUT THE AUTHORS	81
	APPENDIX	V
1.	Questionnaire sample: Survey A	V
2.	Questionnaire sample: Survey B	VI
3.	Aggregate Sector IR-Grids	VII
4.	Profile of an optimal consultant for Swiss companies	X
5.	Profile of a China manager	X
6.	Recommended negotiation tactics with Chinese partners	X
7.	Recommendations for Swiss SME when entering the Chinese market	XII
8.	Interviews of companies with M&A experience	XV