Research pick: Internationalisation from the Great Wall to Wall Street - "M&As by Chinese multinational enterprises in developed economies: strategic asset seeking and bundling"

Research in the European Journal of International Management has looked at the strategic approaches employed by Chinese Multinational Enterprises (CMNEs) in Cross-Border Mergers and Acquisitions (CBMAs). The comprehensive analysis by Juan Wu and Dirk Morschett of the University of Fribourg in Fribourg, Switzerland challenges the assumptions made in this area and reveals a more nuanced perspective on the activity of CMNEs in the global business arena.

CMNEs have been increasingly active in acquiring companies in developed economies through CBMAs. Their activity might be described as being driven by the concept of Strategic Asset Seeking (SAS). Wu and Morschett have looked at the motivations and outcomes of twelve CBMAs, examining events from the perspective of both the acquiring and the acquired companies. Their findings reveal a complex interplay of assets, where CMNEs use their existing country-specific and company-specific resources to complement their Western counterparts. Perhaps surprisingly, the work suggests, this balanced approach facilitates the bundling of resources, leading to innovation and technology transfer in both directions.

One side effect of the team’s approach is that they have been able to refine our understanding of the Strategic Asset Seeking concept itself. They have introduced a dual perspective framework for analyzing assets in CBMAs and this opens up new insights into the role of strategic assets in the internationalization process. Moreover, the concept underscores how there needs to be a synergy between the country-specific and company-specific assets of the CMNes that allows for the effective acquisition and bundling of Western assets.

The research also suggests that where we may once have thought of CMNEs as focusing on cost reduction and knowledge transfer, there is a commitment to collaboration, technology exchange, and additional investments in target companies. Indeed, CMNEs often retain acquired Western firms as centres for high-end markets and utilise this stance for the benefit of various aspects of their business.

These findings could offer insights into asset bundling strategies for companies elsewhere in the developed and emerging economies who might wish to garner mutual value creation by working with Western companies too.

Wu, J. and Morschett, D. (2023) ‘M&As by Chinese multinational enterprises in developed economies: strategic asset seeking and bundling’, European J. International Management, Vol. 21, No. 3, pp.460–488.