China’s M&A Communications Problem: The Bankers Get It…

In the Hutong
Wikileaking
1531 hrs.

In an excellent article in today’s Wall Street Journal, Alison Tudor notes that Chinese firms are increasingly targeting consumer and media companies in their acquisition efforts abroad. Whether or not you agree if this is a new trend, Tudor’s review of China’s challenges in this effort is very good.

I say that because in particular her identification of communications issues as an M&A barrier comes up just below the fold:

Expansion-hungry Chinese companies are likely to encounter some of the same resistance that has snarled foreign deals in nonconsumer industries. To ease fears of the “800-pound gorilla that’s called China,” acquirers should communicate extensively with regulators and the public before pouncing, said Fred Hu, chairman of Primavera Capital Corp.

The good news in this story is that the warning comes not from another communications professional, but from the chairman of a respected investment house. Now that the bankers have caught on to the problem, the question is whether the prospective Chinese acquirers plan to do anything about it.