A Study On Crisis Management Of Culture Conflicts In Cross-border Acquisition

Since China’s entry into WTO, the domestic market has become increasinglycompetitive. Under the guidance of “Going Out” strategy carried out by the country, agrowing number of Chinese enterprises make transnational merger and acquisition. And inthis way, Chinese enterprises intensify their efforts on overseas market exploitation. This isone of the fast and effective ways for them to increase their competitiveness and becomeinternationalized.Influenced by the global financial crisis, many overseas assets are undervalued. Thus,there have been more and more climaxes in Chinese enterprises’ transnational merger andacquisition. Till the year of2009, the total amount of overseas investment made China rankthe second place in the world. In2011, the acquisition activity and total amount reached ahistoric high in the past six years. In1157deals, the amount of985deals adds up to66.918billion US dollars. Compared with622deals in the year of2010, the number of merger andacquisition is increased by86%and the total amount is increased by92.3%. At thebeginning of2012, the overseas merger and acquisition activity has remained strong inChina. It is not only a necessity but also a must for Chinese enterprises to “go out”.However, ample financial resource is not the only determinant in the success ofoverseas acquisitions. Since the process of cross-border acquisition is complicated andvariable, culture differences which will continuously influence the multinational operationin the long run may cause the crisis. The completion of the transaction is just a beginning.How to deal with and effectively manage the crisis which caused by cultural conflicts arewhat Chinese enterprises need to learn. The effect of “1+1>2” after merger and acquisitionis the most important symbol of success.As the first trial of taking part in the competition on the international market forChinese auto companies, SAIC Motor’s acquisition of SANG YONG Motor is regarded asthe symbolizing transaction in Chinese auto’s transnational operation. However, the failurecaused by cultural conflicts made this transaction a nightmare. In this case, SAIC Motordid something worthy of being recommended in cross-culture crisis management. But, itended with a failure because of its limited ability in crisis management and inadequate preparation. This case is a very good lesson and experience for those Chinese enterpriseswhich plan to do overseas acquisition in the future.This thesis is divided into six chapters. Chapter Ⅰ proposes the cause, purpose,methods and frame of research. Chapter Ⅱ presents and evaluates the existing researchresults on the relevant theories about corporate culture, trans-culture administration theoryand theory of crisis management. In Chapter Ⅲ, the paper gives an elaborate descriptionof the case and then Chapter Ⅳ analyses the case from the prescription of cultural conflictwith crisis management model. Chapter Ⅴ proposes some reference for other Chineseenterprises on crisis management caused by cultural conflict: organizing a crisismanagement team, assessing the culture difference carefully, establishing a positive publicrelation, setting up a precaution mechanism, doing the best in cultural integration,collecting information in time, doing good cross-culture communication and getting thecrisis under control.