Cultural Integration After Cross-border M&a Of China’s Automobile Enterprises

Influenced by the financial crisis, global auto giants suffered heavy losses. Theybegan to seek buyers for some of the brands under their names. However, China s autoindustry gained sound development during this period and became the world s largest autoproduction and sales country in2009and maintained this situation in2010.Under thisfavorable environment, with the support of the domestic policy and inspired by the benefitsof gaining the famous brand, advanced technology and access to the developed market,China s auto enterprises started their steps for cross-border M&A, such as Geely sacquisition of DSI, BWI group s acquisition of Delphi Corporation, BAIC MOTOR sacquisition of SAAB and Tengzhong s acquisition of Hummer. However, most of the M&Acases did not achieve the expected results, including SAIC s acquisition of Sanyong in2004. Han Ting (2007) points out that sound corporate culture integration ranks the thirdamong contributors to the success of M&A, while cultural differences are among the first inthe determinants of failure in mergers and acquisitions. From this, we can see theimportance of cross-cultural integration in the cross-border M&As. Cultural integration isalso a big challenge for Geely s acquisition of Volvo, which was just completed last year.So this paper will analyze on the cross-cultural conflicts during China s auto enterprises cross-border M&A and the integration with a focus on the case of Geely and Volvo. In thispaper, firstly I summarize some cultural theories related to this topic, which forms the basisfor the paper and then analyze the features of China s auto industry and their cross-borderM&A and find out that cultural differences and cultural integration have become the mostimportant challenge. Then I point out the factors to be considered in the selection ofcultural integration models and the contents of cultural integration based on thecharacteristics and challenges of China s auto industry and lessons and experiences fromthe several M&A cases in this industry. Lastly, I specifically analyzes the probable crosscultural conflicts after Geely acquisition of Volvo and then give some recommendationsfor their integration based on the above research.