M&As in murky waters without professional talent
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A shortage of professional talent has become a formidable challenge for Chinese enterprises going overseas, an official from the National Development and Reform Commission, the nation's top economic policy planner, said Tuesday.
Kong Linglong, an official who is in charge of the National Development and Reform Commission's overseas investment department, made the comments at the 9th Transnational Corporations China Forum 2011 held in Beijing Tuesday.
"In the past, the demand for international professionals was not strong, but as mergers and acquisitions (M&As) numbers grow, one after the other, (the lack of) talent has become a huge dilemma," said Kong, adding the companies also lack transnational and cross-cultural experience.
According to the Ministry of Commerce, by January of this year, overseas direct investment in the non-financial sector reached $265.1 billion, while overseas investments have jumped from the 17th place in the world in 2005 to current 5th place, a first among developing countries.
However, technology consulting firm Accenture in January predicted that more than half of the overseas M&A made by Chinese firms will end in failure, and losses could reach 300 billion yuan ($45.66 billion) in the next three to five years.
Accenture attributed most failures to the extended time period it takes to integrate two companies.
"The key is that we are not familiar with the outside, but how to get familiar depends on the talent," said Chen Weidong, an energy researcher with China National Offshore Oil Corporation, speaking at the forum, Tuesday.
According to an M&A survey done by the Economist Intelligence Unit, Chinese enterprises invest overseas to foster new market entry, to gain resources and for technology and brand access.
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