The impact of China on your business may be much bigger than you realize.
Why should China be a part of anyone’s overall business strategy and exit plan?
We’re now living in a global economy and for countries, companies, and individuals to remain competitive we have to look beyond historical and geographical positions.
With China being the world’s third largest economy now, I think whether your firm is going to do business with China directly or indirectly you will be impacted somehow by events relating to China, even when you sell the business.
Here’s a real life example. A privately owned company in the U.S. construction-related industry, wanted to sell their business a few years ago. All the known potential buyers were international companies and none were from China.
This company was only marginally involved with China at that time, buying a percentage of its raw materials or semi-completed products from there. But in its effort to sell the company, it formulated at a two-prong strategy, with China being a big part of it.
The first prong was to call Chinese buyers to offer them an entry point into the U.S. market where they had virtually no market share. And the second prong was to look into ways to work with the Chinese in both the Chinese and U.S. markets to build up the company.
But shortly after this China-centric two-prong strategy was launched, the company was acquired by one of the biggest players in the industry. A Chinese threat was just too big because the leading players could not afford to have the Chinese entering the market successfully and upsetting it.
So whether your company is directly or indirectly related to China, you may somehow be impacted by some event related to China. This means China should be considered very strongly in your overall business and business sale strategy.
Business owners who may not be doing much business with China could think about how this particular firm leveraged the Chinese marketplace and did not get purchased by a Chinese firm, but instead leveraged that to be purchased successfully by another buyer.
Many business owners might be thinking they are too small and they’re not doing business with China. But this shows a leveraged approach to making China part of your business sale strategy.