A delegation of Chinese politicians and businessmen is in Europe, their junket portrayed as an M&A opportunity. Here’s a “do” and “don’t” list for those high-powered shoppers, which I’ll try to update in coming days:
DO buy: technology. This is a chance for Chinese companies to buy, at beaten-down prices, expertise, tools and patents to lift the level of sophistication and quality of China’s manufacturing sector. Northern Europe (Germany, the Nordics) and to some extent France should be brimming with opportunities, especially in the automotive industry. (Also aviation.) China could theoretically emerge from the economic downturn with the wherewithal to manufacture all manner of products which overseas consumers WANT to buy versus are just willing to buy because they’re cheap.
DON’T buy too many established brands: It would be unwise for Chinese firms to focus on acquiring high-end marques – automotive or otherwise. It comes down to this: It’s smart for China to buy technology and knowledge, and aim to create upscale home-grown brands. It’s not necessarily smart to buy existing, established brands associated with certain cultures and geographies. Volvo, for example, screams “Scandinavia, quiet confidence, safety-first, elegant simplicity.” Will customers view a China-owned Volvo the same way and pay up for its cars? It’s risky.
In a sense, buying Opel would be a less risky proposition. Opel doesn’t have as luxurious an image as Volvo. There’s a hitch with Opel, however, which is the difficulty of de-coupling it from a wounded GM. Any buyer of Opel will be shackled to GM for years to come, given all the shared components.