Not easy to replicate domestic success, investors warned

This year has witnessed a rapid expansion in Chinese companies' overseas takeover. But experts have cautioned that Chinese acquirers can't assume that they can replicate their domestic success formula overseas.

"Just because you are very successful in China doesn't mean that you can translate those successes factors into activities in the rest of the world," Hans-Paul Burkner, global chairman of Boston Consulting Group, told China Daily.

Burkner was reacting to latest figures from the United States research firm Dealogic that showed Chinese companies have agreed $102 billion in foreign deals so far this year, which is already level with the record $106 billion signed last year.

Recent highest-profile examples include State-owned China National Chemical Corp offering $43 billion for the Swiss company Syngenta AG, a huge global supplier of pesticides and seeds, and a $13 billion cash approach for Starwood Hotels & Resorts Worldwide Inc, by Anbang Insurance Group Co.

But despite the mushrooming activity, Burkner－whose global management consulting firm has offices in 46 countries－cautioned, "the world is not 'flat'. It's very different and diverse".

Burkner joined a host of global CEOs at the China Development Forum in Beijing over the weekend.

"I'm sure some Chinese companies will learn this the hard way, but they will also become internationally minded and appreciate the differences, and prepare themselves better."

Expansion overseas by some of China's largest corporates has hit a few bumps along the way.

In the latest example earlier this month, the US government imposed restrictions on ZTE Corp that made it difficult for the Chinese telecom equipment and smartphone maker to acquire US components, by requiring its suppliers to apply for an export license before selling ZTE any US-made equipment or parts.

In January, Chinese property giant Dalian Wanda Group Co was also forced to reassess its plans for a historic skyscraper in Madrid, amid a dispute with local authorities over its redevelopment plans.

Burkner said the biggest challenge for Chinese companies is that they are going from a "protected" world to a "unprotected" world, and that the factors that contributed to their domestic success do not exist in overseas markets.

For example, robust demand in the past three decades meant that they were able to grow fast even without a clear strategy or customer-centric approaches, he said.

Compromised environmental and labor regulations also meant they had limited experience in dealing with unions and environmentalists overseas.

Chinese companies often find themselves in a wonderland overseas, he said, where there is slow market growth, saturated brands, decentralized power structure, and governments' anti-dumping, anti-monopoly investigations.

"You need to be open. That's said, I believed Chinese companies could learn faster than their predecessors because they can learn from their mistakes. Failures are the best teachers," he said.

Zhao Linghuan, CEO of private-equity firm Hony Capital, however, said companies should also be "very careful when applying past experience".

Also at the forum, he said Hony has been particularly active in deals that integrate overseas brands into the Chinese market. "Sometimes the more (lessons) you apply, the heavier the loss.

"The rapid advancement in technology means many past experience has become irrelevant for now," he said.

Hony is involved in the ongoing $3.3 billion bid by Zoomlion Heavy Industry Science & Technology Co for US crane-maker Terex Corp.

If it succeeds, the merged company could become the world's second-largest equipment engineering corporation.

Hony also raised eyebrows when its parent company, Legend Holdings Corp, took a stake in WeWork, a platform for booking shared workspace in the US.