Haier, unbeknownst to me until a few moments ago, turns out to be a sponsor of the NBA. Still, who else is aware of this? The International Herald Tribune suggests that China may be adopting an alternative "stealth" strategy to this problem of name recognition by buying up foreign companies in distress with recognizable brands. It makes a lot of sense, especially now that China has decided to put more of its $1 trillion reserve hoard into play, partly to silence criticism that it has placed too much of its investments in relatively low-yielding assets such as US Treasuries:It began in 2002 when TCL, a Chinese maker of televisions and mobile phones, bought the German company Schneider Electronics. The Chinese computer maker Lenovo acquired IBM's personal computer business in 2004.The State Administration of Foreign Exchange (SAFE), which until recently has been solely tasked to oversee this hoard, has become more liberal in giving foreign exchange to Chinese firms wishing to invest in foreign enterprises:Qianjiang Group, the largest Chinese motorcycle manufacturer, now owns Benelli, the oldest motorcycle maker in Italy. Shenyang Machine Tool Group has bought Schiess, a longtime maker of German machine tools. Xinjiang Chalkis even owns a French tomato cannery and sells Chinese tomato sauce in Provence.
To encourage outbound investment. the Ministry of Commerce now accepts applications online and the State Administration of Foreign Exchange has abolished quotas on the purchase of foreign exchange for such deals. These changes have led to a sharp increase in overseas deals all over the world.To me, it is a good deal all around. The Chinese gain brands recognized in other parts of the globe while distressed Western brands gain a second chance and access to the potentially lucrative Chinese market. Marketers aim for the win-win; perhaps that's the case here.
