Foreign Takeover Controversial

154941 Resource 94086 93210 94146 1168310464223 1201212724454 Controlled Supply Chain Implications of New Chinese M&A Regulations

Are "Collaborative Supply Chains" an Alternative for China?

China’s mergers and acquisition (M&A) rules, effective September 2006, placed new restrictions on foreign companies that are carrying-out acquisitions of domestic enterprises. Based on feedback from the American Chamber of Commerce Shanghai’s HOT TOPICS SURVEY regarding the new regulations, the M&A law is perceived by 61% of survey participants to imply an effort from China’s central government to protect specific industry sectors. Roughly 30% of survey participants believed the restrictions will likely slow investment activities in their industry. Could the ‘economic patriotism” witnessed at present in China help open the path towards radically new supply chain designs? Does the equity structure proposed by the Chinese government involving share swapping signal that the time is right to look into new organizational formats such as ‘Joint Services Companies’? As proposed by author John Gattorna, a Joint Services Company exhibits the following characteristics: <ul><li>Co-owned, co managed service company </li><li>Pre-determined incentives and rewards based on performance </li><li>Infusion of innovation ‘culture’ in organizational design</li><li>Financial engineering to fund set-up and operations </li></ul> The basic premise of such a supply chain business model is that needed capabilities are acquired at a particular point in time, with the organizational structure, motivation/reward systems and funding arrangements being designed to bring together various parties which possess the capabilities needed. Comparison of Traditional M&A Program with Joint Services Company Concept <table border="1" style="width: 100%;"><tbody><tr><td style="text-align: center;">Feature </td><td style="font-weight: bold; text-align: center;">Traditional Approach </td><td style="font-weight: bold; text-align: center;">Joint-Services Company </td></tr><tr><td style="vertical-align: top; text-align: center;">Ownership and Risk </td><td style="vertical-align: top; text-align: center;">100% in-house </td><td style="vertical-align: top; text-align: center;">Jointly Owned </td></tr><tr><td style="vertical-align: top; text-align: center;">People </td><td style="vertical-align: top; text-align: center;">Bought-in Resources </td><td style="vertical-align: top; text-align: center;">Enhanced Career Path </td></tr><tr><td style="text-align: center;">Objective </td><td style="text-align: center;">Process Improvement </td><td style="text-align: center;">Share Price Growth </td></tr><tr><td style="vertical-align: top; text-align: center;">Motivation </td><td style="vertical-align: top; text-align: center;">Policy and Compliance </td><td style="vertical-align: top; text-align: center;">Mutual Shared Goals </td></tr><tr><td style="vertical-align: top; text-align: center;">Incentives </td><td style="vertical-align: top; text-align: center;">Milestones </td><td style="vertical-align: top; text-align: center;">Fusion of all Partners' Share Prices </td></tr><tr><td style="vertical-align: top; text-align: center;">Funding </td><td style="vertical-align: top; text-align: center;">100% in-house </td><td style="vertical-align: top; text-align: center;">Own, other Third Parties </td></tr><tr><td style="vertical-align: top; text-align: center;">Focus </td><td style="vertical-align: top; text-align: center;">Template Roll-out </td><td style="vertical-align: top; text-align: center;">Capability at Speed </td></tr><tr><td style="vertical-align: top; text-align: center;">Control </td><td style="vertical-align: top; text-align: center;">Program Managment </td><td style="vertical-align: top; text-align: center;">Improved and Flexible </td></tr><tr><td style="vertical-align: top; text-align: center;">Future Option </td><td style="vertical-align: top; text-align: center;">Sustain Non-Core Activity </td><td style="vertical-align: top; text-align: center;">ROI Easier to Get </td></tr><tr><td style="vertical-align: top; text-align: center;">Strategy </td><td style="vertical-align: top; text-align: center;">Better IT </td><td style="vertical-align: top; text-align: center;">Marketplace Leadership </td></tr></tbody></table> Now may be the time to re-think the way we design and manage supply chains. Collaborative networks may prove to be a more fruitful method for achieving effective asset utlization and improved profitability. Logistics service providers can potentially also be included as minor equity holders in the new joint services company business model.  9 application/xml false Amcham hot topics china china 3pl China acquistion china distribution china M&A china regulations china strategy china supply chain Foreign Takeover Controversial China Daily Updated: 2006-04-11 15:29 http://www.chinadaily.com.cn/china/2006-04/11/content_565382.htm What Are the Implications of the New Chinese M&A Regulations? New York Law Journal: November 9, 2006 http://www.law.com/jsp/ihc/PubArticleIHC.jsp?id=1162980323479 Amcham Shanghai's HOT TOPICS SURVEY Results New M&A Regulations in China http://www.amcham-shanghai.org/AmchamPortal/ Living Supply Chains Author: John Gattorna http://www.johngattorna.com Mozilla/5.0 (Windows; U; Windows NT 6.0; en-US; rv:1.8.1.11) Gecko/20071127 Firefox/2.0.0.11 127.0.0.1 127.0.0.1 Establish 208.105.4.154 false true false false true 187565 false false true false false false true 94086 blog blogsite/ChinaSupplyChain/web