Chinese Cross-Border Acquisition Strategies in Japan – Changing from a Resource-Driven to a Market-Driven Approach

Fei Chen,Kashif Ahmed,Ralf Bebenroth

doi:10.15388/omee.2020.11.22

Fei Chen, Kashif Ahmed + Show 1 more

Open Access

https://doi.org/10.15388/omee.2020.11.22

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Abstract

The aim of this research is the investigation of strategic behavior of Chinese investors in Japan when making cross-border acquisitions in recent times. While previous literature on acquisitions tended to show that Chinese acquirers were merely resource-driven, i.e. their main purpose was to acquire products, brands, and knowledge to be transferred back to the (Chinese) home market, our study suggests that the behavior of many Chinese firms has changed lately. In a pivotal study with 39 Chinese bidders taking over Japanese targets, we find that their strategy has become increasingly market-driven instead. As far as industry-wise acquisitions are concerned, Chinese firms are taking over Japanese hotels and recreation facilities in recent years for the purpose of providing services to Chinese tourists.

Highlights

Cross-border acquisitions are traditionally categorized according to at least two significant motives, viz. asset augmentation and asset exploitation (Chen & Young, 2010)
Shandong Ruyi acquiring Renown, and Haier acquiring Sanyo can serve as examples of Chinese resource-driven acquisitions because Chinese acquirers aimed for advanced technology or brand names
The Chinese firm Laox, e.g., serves as a typical market-driven acquisition by a Chinese acquirer targeting a firm in the Japanese retail market

Summary

Introduction

Cross-border acquisitions are traditionally categorized according to at least two significant motives, viz. asset augmentation and asset exploitation (Chen & Young, 2010). Cross-border acquisitions are traditionally categorized according to at least two significant motives, viz. If enterprises are motivated by asset augmentation, they pursue cross-border targets to enhance efficiency and competitiveness. If the latter motivation propels them, they would find ways to leverage the acquired target in a new setting, which in turn enables them to gain competitive advantage over domestic companies in the host nation (Caves, 1971; Neary, 2007). Leading firms from developed markets acquire cross-border targets so as to get a foothold in a foreign country (Rottig & de Oliveira, 2019). Researchers frequently assert that developing countries’ cross-border acquisitions are mainly led by strategic-asset seeking motivation (Dunning et al, 1996)

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