Chinese firms get more adept in effectively managing takeovers of foreign companies
Chinese companies, often rich in capital but with limited experience in managing cross-border investment, have been putting more efforts into sharpening their skills on post-merger integration as the latest wave of outbound mergers and acquisitions presents a number of major challenges.
Anbang Insurance Group Co Ltd, the Beijing-based insurer which gained prominence for its high-profile global acquisitions, is among the Chinese companies that have started reaping rewards from their overseas acquisitions thanks to the effective execution of post-merger strategies.
South Korean firm Tongyang Life Insurance Co, which Anbang acquired for $1 billion last September, saw its net profit hit a record high of 155.5 billion won ($136 million) in the first half of this year, up by 18.2 percent from a year earlier. Sales revenue also soared by 76.6 percent to reach 4.09 trillion won.
Senior executives at Anbang and Tongyang Life attributed the improvement in business to the adoption of Anbang's business strategies and management concepts.
While maintaining the stability of Tongyang's South Korean management team, Anbang introduced some bold reforms including introducing a flattened corporate structure with greater emphasis on capability instead of age and seniority.
Such arrangements have improved the firm's operational efficiency and service quality, which in turn helped reduce client complaints, according to Zhang Ke, vice-president and chief financial officer of Tongyang Life Insurance.
Anbang also established a special committee for budget control to ensure that costs are under tight control while maintaining the quality of its service and products.
"We make our goals clear, which are controlling costs, while enhancing productivity and competitiveness," said Han S. Koo, president and chief executive of Tongyang Life Insurance.
Anbang's emphasis on mobile technology and the internet has boosted Tongyang's premium income, and the ratio of sales through smartphones has been lifted from just 10 percent in 2013 to 50 percent today.
By absorbing Anbang's management ideas, Tongyang Life Insurance has become a leading insurer in South Korea and gained the opportunity to become an international player thanks to the broader investment access provided by the Chinese parent company.
