PMI strategies: Make it or break it

Chinese companies, pay attention: Post-merger integration (PMI) can make or break a deal. PRC corporations must be mindful of PMI-related challenges and make adequate preparations to meet these as inexperience and ignorance could hamper a successful merger life cycle. “You can have the best deal in the world, but if you don't have the PMI right, then it can become unraveled very quickly,” says Dane Chamorro, the Greater China managing director of Control Risks. Broad & Bright Beijing-based partner, Libin Zhang adds: “Chinese companies are still on the learning curve, and although PMI is something they neglect and don't pay much attention to, they will learn as they swim.”

Since 2000, when the Chinese government introduced its “Go abroad” policy, the Capital has been aggressively encouraging domestic companies to invest overseas and create a bigger footprint. Currently, China ranks 15th in the world for outbound investment and at the end of 2009, its outbound direct investment (ODI) had exceeded US$1 trillion. In fact, the Ministry of Commerce (Mofcom) announced in November that it will develop policies to boost China's offshore direct investment over the next few years. This comes a year after it offered a new online resource for Chinese companies investing abroad, a supplement to its original 2004-released Guiding Catalogue of Countries and Industries for Overseas Investment. The Catalogue was further revised in 2005 and in 2007. A more recent revision has been in talks for the last two years, and many market observers are optimistic about this being released in 2011.