Chinese brands: the build or buy considerations

Abstract

This paper discusses the strategic motives, the markets entered, the methods used and the challenges faced by Chinese companies building their own brand or buying one to expand globally. We present a regression model enabling the analysis of recent Mergers and Acquisitions (M&A) activities and the successes and failures between the Chinese and foreign target companies. The developed model considers the strategic motives to globalise, the type of country and acquisition. By using the Monte Carlo resampling methods, we can draw conclusions about the probability of success of the outbound M&A success.Our results show that brand-motivated acquisitions are more likely to be completed than resource-based acquisitions both in developed and developing markets. Our research found that all branding related acquisitions are in developed countries. However, the numbers of resource based acquisitions were evenly split between developing and developed countries, where in the developed countries, they were more likely to fail than in the developing ones. Nationalistic sentiments seem to be heightened by these resource-based acquisitions and were much more common in developed countries than in developing ones. It also seems that Chinese companies build brand recognition in developed countries by buying readily established brand names and are more likely to build their own brand in developing countries.Keywords: international business; globalisation; automotive industry; China; exporting M&A; branding; international marketing; Outward Direct Investment; ODI.Reference to this paper should be made as follows: Fetscherin, M. and Sardy, M. (xxxx) 'Chinese brands: the build or buy considerations', Int.

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“…A recent phenomenon shows that Chinese firms are no longer focusing on domestic market and going 'global. ' Current researchers found that there are many underlying motives for Chinese firms to go global, in which 'creating a single and globally recognized brand' is one (Fetscherin and Sardy 2008;Fan 2006). Constantly, global firms remain focused on managing sales volume and brand equity by offering customers some values and beliefs which can stimulate purchase intention.…”

Country of Origin Effect on U.S. Consumers’ Brand Personality Perception of Automobiles from China and India

“…While these export figures are still relatively small by industry standards and there are still many challenges to overcome for manufacturers from both countries, it is probably a matter of time before they follow the example of Japan and South Korea and firmly establish themselves in foreign markets. In light of these developments, it seems appropriate to investigate how consumers in developed country markets will perceive cars that are manufactured in developing countries by developing country manufacturers and especially how their car brands are perceived (Fetscherin and Sardy 2008). The purpose of this paper is to investigate this increasingly important issue, focusing on the product category of automobiles from China and India.…”