Love at first sight - 见钟情

Only a few are lucky to be able to share the fact that they were fortunate enough to meet their other half through love at first sight. For most, finding their partner is usually preceded by several unfruitful relationships, until the right one appears. When it comes to business, Mexican and Chinese companies usually follow the same path to find their soul mates.

At an investment seminar held in Mexico, a government official stated "no matter whether they are Chinese or Mexican, enterprises from both countries need to invest time and resources to travel, go out with, and get to know business partners; eventually, this growing relationship will become a marriage, and if it all goes well, it will bring their own offspring".

At the Chinese Services Group we have identified some key points Chinese or Mexican companies should be aware of when getting married to a local missing half as means of doing business in China or Mexico.

Your partner is not that in to you? Why companies cannot get the girl!

In China, guān xì (关系), which literally means relationship, still plays a significant role when it comes to making things happen. A business practice that relies on personal connections or network of contacts that will ensure business success. In Mexico, compadrazgo (co-godparenthood) has a similar role than guān xì in China. People are usually asked to be a padrino or madrina (godparent) to an ahijado or ahijada (godchild). Through this agreement, an acquaintance may be selected as a means to strengthen business ties.

While both may be effective at some level, this not necessarily means companies should exclusively rely on getting to know their missing half by guān xì or compadrazgo. Usually, this approach does not consider whether your partner has the skills and resources to compete with players that have been in the market for years, or if they have the knowledge to handle your product and execute successful aftermarket services to retain clients.

It is not me, it is you! Finding your missing half is one thing… keeping them happy is another.

During the last decade, Mexican players from same industries have travelled to China to procure or to find local sales representatives. Once they have found them, they face the fact that companies from all over the world are doing the same thing: bringing new products with competitive prices, committing marketing budgets, and even establishing local representative offices.

At the same time, Chinese entrepreneurs are no longer waiting at the Canton Trade Fair to meet new clients. Once they come to Mexico, they rely on their existing contacts and underestimate hidden business opportunities in partnering with family-owned companies: a group that largely exceeds the public listed organizations.

Where is this relationship going? We need to talk.

Non discussing future goals at the beginning of a growing romance may be potentially challenged with partners having different long term objectives. One may expect immediate returns while the other is focused on market share and brand building. Another may also arise on geographies and distribution channels that will be covered under the new marriage. Not to mention, among many others issues, that any of them may consider bringing a third party into the relationship.

How to meet your local missing half

When compared to building business from scratch, entering into any new business relationship with a local partner offers significant potential advantages: expanding product portfolio, immediate access to the market, reducing the curve of the learning experience, etc.

At the same time, it carries a significant degree of risk. This is particularly true in emerging economies like Mexico and China where inadequate corporate governance and lack of reliable information is common. Therefore, before getting married, it is highly recommendable to carefully define who may be "the partner of your dreams"; once you have identified them in the local market, you should conduct a multidisciplinary due diligence before committing to a mortgage together or having offspring.

At the Chinese Services Group we will not be able to help you find out who your missing half is, but we do have the experience and unmatched value added services to help you succeed in business partnering in China or Mexico.

Back to top

China M&A Round-up, 12-17-2010
For you information, please see attached the latest Deloitte China M&A weekly report. These are some of the transactions announced from December 10, 2010 - December 17, 2010

• Sinopec will buy Occidental Petroleum's oil and gas assets in Argentina for US$2.45 billion.
• Mengniu confirmed its bid for the purchase of Yoplait, meanwhile JPMorgan increased its shareholding in Mengniu.
• China Merchants Holdings International Co will acquire a 20% stake in Chu Kong River Trade Terminal.
• Shanghai Pharmaceuticals Holding will buy two drug companies for US$570.1 million.
  

Download PDF in English

China M&A Round-up, 12-10-2010
For your information, please see attached the latest Deloitte China M&A weekly report. These are among the transactions announced from December 03, 2010 - December 10, 2010

• R Shenzhen Stock Exchange-listed Shenzhen Zhongjin Lingnan Nonfemet Co. Ltd., China's leading zinc smelter, has received approval from the National Development and Reform Commission (NDRC) to purchase Canada-based miner GlobeStar Mining Corp.
• Bright Food, teaming up with Blackstone, is to acquire GNC for US$2.5 ~ 3.0 billion.
• Sinopec acquire an 18% stake of deep-sea blocks from Chevron Corp for US$6 billion-plus.
• China Life, invested an additional US$450 million in Guangdong Development Bank, maintaining its 20% stake.
• CNOOC is bidding for Exoma for US$78 million abroad, while considering buying a 50% stake CUCBM.
  

Download PDF in English

Back to top

The chemical multiverse: Preparing for quantum changes in the global chemical industry
An in-depth examination of the state of the global chemical industry reveals anything but a cohesive picture of an industry on a linear path. It remains the case that chemical products will play vital roles in solving many of the world´s problems over the next 10 years and well into the future.

Download document in English

Global Economic Outlook: Multi-speed recovery, Q4-2010
The global economy countries continues to grow, but ongoing imbalances haunt policymakers. Interest rates in developed countries are unusually low, reflecting aggressive monetary policy and weak demand for credit. Hence, money is flowing out of these countries into higher interest rate emerging markets. Yet in those countries where growth is strong, the inflow of capital is putting upward pressure on currency values, thereby hurting export competitiveness.

Download document in English

Think global start local: A geographic guide to outbound investment opportunities
China has assumed its place among the major economies of the world, and Chinese enterprises of all sizes and sectors must look abroad to acquire resources, talents, brands, technologies, and market access to continue strong growth. Even the most successful companies in the domestic market will face new challenges in going abroad. The potential gains are big, but so are the risks.

Deloitte has a large base of clients in China, both state –owned and privately owned enterprises ranging from medium to very large. We have long experience working with them and a history of successful support of their globalizing activities.

Download document in English
Download document in Chinese

Back to top

Over the past year, we have observed the implementation of new tax rules and the announcement of various tax cases. What do they mean to the taxpayers? How to communicate with the tax authority towards win-win results? How can we manage cross-border tax risks? What are the tax considerations for outbound investment? We would like to navigate together with you in a reset world from a China corporate tax perspective.

This half day conference will be held in Shanghai, Hong Kong, Beijing, Shenzhen and Guangzhou on the following dates:

• Shanghai – 11 January, 2011 (Tuesday)
• Hong Kong – 13 January, 2011 (Thursday)
• Beijing – 18 January, 2011 (Tuesday)
• Shenzhen – 24 January, 2011 (Monday)
• Guangzhou – 25 January, 2011 (Tuesday)

Download flyer
Download registration form

For enquiries, please feel free to contact us:

Shanghai
Babarra Li
Direct: + 86 21 6141 1089
Fax: + 86 21 6335 0003
Email: babli@deloitte.com.cn

Hong Kong SAR
Wandy Luk
Direct: + (852) 2852 6331
Fax: + (852) 2541 1911
Email: wanluk@deloitte.com.hk

Beijing
CiCi Cui
Direct: + 86 10 8512 5407
Fax: + 86 10 8518 1326
Email: cicui@deloitte.com.cn

Shenzhen
Tracy Xu
Direct: + 86 755 8246 3255 ext. 8106
Fax: + 86 755 8246 3222
Email: trxu@deloitte.com.cn

Guangzhou
Stephanie Lan
Direct: + 86 20 2831 1331
Fax: + 86 20 3888 0121
Email: slan@deloitte.com.cn

More information: www.deloitte.com

Back to top

China Tax and Regulatory Update
January 13, 2011, 11:00 a.m. EST
How will recent tax and regulatory changes affect your business models and impact your returns in China? What issues do these changes pose to most foreign investors? We'll discuss:

• Recent regulatory changes and their impact on tax and strategy planning for multinationals.
• Latest tax law developments and related implications.
• Leading practices and solutions to resolve China tax issues.

Learn how your peers are striving to anticipate, manage, and resolve issues and how to best position your business in the ever-changing regulatory environment.

Register to this webcast
Asia Pacific Dbriefs

China Cross-Border Investment Quarterly Roundup, Plus a Focus on Strategic Alliances
February 10, 2011, 11:00 a.m. EST
What foreign direct investment activities have taken place in China this past quarter, and what are recent changes in the overall investment environment? As a special focus, what are pros and cons of cross-border "competition"? Can U.S. investors enhance their long-term competitiveness by partnering with Chinese competitors in the short-term? We'll discuss:

• Trends in cross-border M&A and green-field investment in China.
• Recent case studies of innovative strategic alliances between U.S.and Chinese companies.
• "Competition" as a cross-border investment strategy.

Stay abreast of China's cross-border investment environment and understand how cross-border alliances might impact your competitiveness.

Register to this webcast