On March 30, PAG, CITIC Capital, Ares Management, Platinum Peony, a wholly-owned subsidiary of the Abu Dhabi Investment Authority (ADIA) and Mubadala Investment Company) and Dalian Wanda Commercial Management Co., Ltd. formally signed an investment agreement, under which the first five companies jointly invested approximately RMB60 billion in Dalian Xindameng Commercial Management Co., Ltd., holding a total of 60% of the shares, with Dalian Wanda Commercial Management holding 40% of the shares.
The investment agreement also means that Wang Jianlin has completely lost his controlling stake in Wanda, and the 60 billion yuan investment has provided Wanda Group with much-needed financial support to help it get out of the predicament of the 38 billion yuan repurchase money. Without this huge amount of money, Wang Jianlin would probably have had to sell more Wanda Plaza to raise funds to tide over the debt crisis.
Mergers and acquisitions
The connotation of mergers and acquisitions is relatively broad, generally referring to mergers and acquisitions. Mergers usually have two meanings, in the narrow sense of the word, merger refers to the fact that the merged company does not exist after the merger, while the company of the merging party continues to remain. Mergers in a broad sense generally refer to new mergers, which refer to the merger of multiple companies (two or more) that do not retain the original company but create a new company.
The core of an acquisition is the control of a company or enterprise, and the main purpose is to control the enterprise. The acquirer can complete the acquisition through cash, stocks, securities, etc., and obtain a controlling stake in the acquiree. Mergers and acquisitions are one of the main ways of investment between enterprises, and because the connotations of mergers and acquisitions are very similar, they are collectively called mergers and acquisitions.
Wanda's acquisition has attracted widespread attention in the market, and many people believe that the acquisition of Chinese companies by foreign investors is not a good thing, and it is certainly not good for China's economic development. In fact, this is a biased and erroneous view.
At present, China's economy has entered a stage of high-quality development of transformation and upgrading, and Wanda's acquisition by foreign investors is the inevitable result of China's high-level opening up and integration into the international economic system.
In fact, Wanda Group's introduction of overseas investment is a microcosm of China's high-level opening-up policy. In the current context of global economic integration, cross-border investment has become an important force to promote enterprise and economic development. Wanda's 38% stake in exchange for an investment of 60 billion yuan can also be seen as an act of international capital buying China's high-quality assets.
Wanda chose to cooperate with international capital, not only to bring in capital, but more importantly, to accelerate the internationalization of its business with the help of external forces. For Wanda, this move is a strategic expansion, not a so-called "loss of control".
Facts have proven that opening up to the outside world at a high level is an inevitable requirement for the mainland's economy and society to enter a new stage of development. In order to promote the development of economic globalization and seize the opportunity of a new round of reform and opening up, only high-level opening-up can promote high-quality development.
To achieve a higher level of opening up, it is mainly reflected in the following aspects:
1. The scope of opening is larger
Over the past 40 years of reform and opening up, the mainland has achieved a series of major achievements in the open economic system, but there has still been no substantive breakthrough in the pattern of opening up to the outside world in the east and slow in the west, and the coastal areas being strong and the inland areas weak.
2. The implementation of wider opening up is an objective need for economic development in the new era
After the mainland entered the stage of high-quality development, it required the implementation of high-level opening-up in a wider range of fields to meet the needs of economic development. This makes the opening up not only limited to the opening of the manufacturing industry, but also includes: the opening of the advanced manufacturing industry and the opening of the service industry, including the orderly opening of the financial, insurance, consulting services, telecommunication services, medical care, education, pension and other service fields.
3. Deeper opening up means shifting from border opening in the past to opening up within the border, and promoting the construction of a new system of open economy at a higher level with institutional opening
At present, the development of the global value chain has entered a new stage, and due to the continuous extension and expansion of the value chain to the middle and high-end, including the global innovation chain, it is also progressing in depth. As a result, there is a growing demand for the harmonization and weakening of rules and systems in different countries.
It can be seen that in order to adapt to the new needs of the evolution of global value chains, it is necessary to further promote the deepening of trade and investment liberalization from border opening to intraborder opening.
Over the past 40 years of reform and opening up, mainland enterprises have experienced three modes in the process of innovation and internationalization: going out, going in, and going up. Through the practice of these three stages, Chinese enterprises have better promoted the internationalization of innovation in the process of internationalization.
In the first stage of cross-border operation, Chinese enterprises mainly adopt the "going out" model. The goal of "going out" is to achieve technology introduction through paving overseas operations. The second stage of cross-border operation of Chinese enterprises mainly adopts the "go in" model. The goal of "going inside" is to promote technology integration through connected overseas operations.
The third stage of cross-border operation of Chinese enterprises mainly adopts the "go up" model. The goal of the "go up" model is to promote technology leadership through a web of cross-border operations.
In recent years, overseas mergers and acquisitions have become an important way for Chinese enterprises to invest abroad. Under the new round of global mergers and acquisitions, the number of overseas mergers and acquisitions of Chinese enterprises is not only growing rapidly, but also paying more attention to the technical content, and Chinese enterprises are entering a new stage of "going out", which is conducive to enhancing China's voice in the world economic map and rapidly improving the technology and brand of products and services.
Since the beginning of the new era, China's economic strategy has been opening its doors to the world and encouraging foreign investment. Nowadays, when a large enterprise of this type of Wanda introduces foreign investment, it is actually practicing the country's economic policy and actively integrating into the global economic system.
The high-level opening up is not limited to the capital level, but also reflected in technical exchanges, management experience and other aspects. Therefore, it is obviously a misunderstanding to interpret Wanda's investment behavior simply as a lack of confidence in China's economy.
The strategic investment introduced by Wanda Group this time is undoubtedly a bold attempt and forward-looking layout. Through this cooperation, Wanda will not only take this opportunity to further strengthen its ties with international capital, but also pave the way for the international development of its business.
In fact, Wanda's acquisition is not a bad thing for China's economy, but a positive signal that Chinese companies have the confidence and ability to play a more active role in the global economic arena.
If China's economy wants to go global and better realize its own value in the global industrial and supply chain, it must take the initiative to integrate into the international economic system. The participation of enterprises in M&A is of great significance to promote the high-quality development of China's economy, which is mainly reflected in the following aspects:
1. Expand the international market
When the domestic market is saturated, overseas M&A can help companies enter new markets and increase market share.
2. Access to advanced technology
Through mergers and acquisitions, enterprises can directly obtain the core technologies of developed countries, break through technical bottlenecks, and improve product competitiveness.
3. Enhance brand influence
Leverage the acquired company's sales network and brand influence to expand the international market.
4. Extend the production chain and increase product diversification
M&A related enterprises can extend the production chain, diversify the company's products, and add more value.
5. Enhance the security of national resources
M&A can increase the import channels of resources, especially strategic resources, and improve national resource security.
6. Reduce the impact of exchange rates and bypass trade barriers.
M&A can help companies reduce the impact of exchange rates, bypass trade barriers, and reduce competitors.
To sum up, in the new era of reform and opening up, "going out, going in, and going up" has become a new three-step strategy for China to build an international enterprise and a global brand. "Going out" refers to hard power, which is the embodiment of the strength of capital and technical resources. "Going in" refers to soft power, which is the successful embodiment of cross-cultural communication and management.
"Going up" refers to the perfect combination of hard power and soft power, which is the embodiment of the respect of the government, enterprises and people of the host country, and is also the goal that international enterprises should pursue in order to be well-known in the world.
It is hoped that Wanda's M&A will become a successful case that reflects China's high-level opening up and Chinese enterprises integrate into the international economic system.
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