Cultural Integration Of Chinese Companies' Cross-Border Mergers And Acquisitions

With the further development of China's reform and opening up, Chinesecompanies are going global through a series of cross-border mergers and acquisitionsdirected by the nation's "going out" policy. From the experiences of foreigncompanies' M&A, we can see that there are a large number of M&A failures,especially in the field of international M&A. According to M&A studies, 70% ofcross-border M&A failures are caused by problems in cultural integration. How todeal with cultural differences on both national and organizational level poses a greatchallenge for Chinese managers because most of them lack the experience andexpertise of cross-cultural management.The purpose of this paper is to study the effects of both national andorganizational culture differences on Chinese enterprises' cross-border M&A. This isdone based on a brief literature review of theories on M&A, cultural dimensions andcultural studies on cross-border M&A. Two cases have been chosen and studied as thebasis for this research. One is Lenovo's acquisition of IBM's PC division;the other isTCL' merger with Alcatel and Thomson. The cultural differences of these two caseswill be described and studied based on the cultural dimension theories. Their culturalintegration strategies will be analyzed and compared based on the cultural theories ofinternational M&A. The paper points out that it will be conducive to the M&Asuccess if Chinese managers develop a strong cross-cultural sensitivity by conductinga preliminary cultural analysis and addressing cultural differences purposefully. It isalso crucial for the ultimate success of post-M&A integration to manage these culturaldifferences effectively and choose the suitable mode of acculturation during the actualintegration process. Lastly, the paper is concluded by offering some recommendationsand further research suggestions.