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An article in the Financial Times shows that more than 90 per cent of Chinese respondents to the new survey conducted by the Economist Intelligence Unit and Norton Rose, the law firm, said they were looking to conduct a merger or acquisition over the next 12 months. The article is shown below. For more information on research in China visit the website for our subsidiary in Beijing.

CHINA AIMS TO BUY UP MORE OVERSEAS COMPANIES

Record numbers of Chinese companies are looking for overseas acquisitions, according to results of a survey published yesterday which foreshadows a global buying spree with potential political repercussions.

China Inc has to date been a reluctant player on the world stage, apart from in the state-controlled energy sector, with most companies either unprepared or fearful of managing assets overseas.

By contrast, Indian companies have recently embarked on a global acquisitions binge, highlighted by Tata Steel’s $11bn takeover this year of Corus, the Anglo-Dutch steelmaker.

However, more than 90 per cent of Chinese respondents to the new survey conducted by the Economist Intelligence Unit and Norton Rose, the law firm, said they were looking to conduct a merger or acquisition over the next 12 months.

The executives of Chinese companies said they were looking in Asia, Europe and North America.

Richard Crosby, a Hong Kong-based partner of Norton Rose, said: “The findings show an increasing willingness among Chinese companies to consider deals outside Asia.”

The findings suggest Chinese executives are seeking to build global scale, two years after US lawmakers famously prevented CNOOC, the state oil company, from acquiring Unocal for “strategic” reasons.

Bankers who advise mainland companies predict that China’s leading telecommunications and financial services companies will lead the acquisitions charge. Rodney Ward, UBS Asia chairman, said: “Corporate China will continue to seek overseas acquisitions to exploit economies of scale.”

The findings form part of a survey on cross-border corporate deals based on responses from 258 executives across Asia, excluding Japan and Australia.

The EIU found that intra-Asian M&A climbed over the past five years from 1,102 cross-border acquisitions valued at $30bn to 2,073 deals valued at $52bn. Buy-outs by Asian companies in Europe and North America rose from $2.6bn in 2002 to $15bn in 2006.

The survey found that while China is expected to lead the region’s M&A boom this year, respondents believe that the mainland remained the most challenging terrain in Asia to conduct business from a regulatory perspective.

Asian executives voted the US and France as the most difficult western countries in which to operate because of the higher likelihood of M&A deals being blocked on political grounds.

Western investors are seeking acquisitions in Asia to take advantage of fast growth rates. But respondents said western companies’ focus on compliance-related issues “makes it difficult to negotiate deals with them”.

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There are few places where so many factors can influence the smooth execution of market research studies as Latin America. Here are some basic rules critical to mission success, to be followed for a happy ending to any project.

These “LatAm Research Laws” can be summarised in three broad categories:

Language and Culture
Logistics and Climate
Legal and Economical

For many global research projects, researchers try to adopt identical methods, even in vastly different markets and cultures. For Latin America, this approach may function well in two diverse situations: where that method is so basic that it will suit even very low-tech environments, or if the target respondents are culturally similar worldwide, such as software developers, the project may be successful.

But this is not the case for research in Latin America with consumers, the trade, or most B2B publics. Without a local interface to smooth the way, there is little chance of the uniform worldwide method functioning throughout the region; and if it is applied without adjustments, there is only a low probability that the results will be as desired.

Heed language differences, including those among countries with the deceiving similarity of a common language; i.e. Spanish.

Heed cultural particularities. For example, the telephone may be the most appropriate method for a study in some LatAm countries, while elsewhere telephone will not function. It depends on diverse factors such as sample demographics, interview timing, the subject matter and the questionnaire structure.

Respect your Providers. Do not impose eminently pragmatic business treatment on professionals accustomed to a warmer, personal dialogue. Don’t expect them to give same-day turnaround for your anonymously-addressed “gang e-mail”.

Speak a global language. Avoid using buzz words and acronyms in communications and especially in questionnaires.

Use universal terminology. Don’t even think of asking all your local providers for a sample of classes “A, B and C1” unless you are willing to have a sample equivalent to the top 15%in one Latin American country, but only the top 40% in another part of the region. Use the universal language such as “per cent”.

Don’t ask what people will not answer. Beginning an interview with an income filter is a direct route to sampling error, because half the respondents might refuse, and those at both ends of the income spectrum might distort their responses.

Don’t shop in the dark. Seek help both “here” and “there”. First get suggestions and references from experience research buyers. A “gang e-mail” sent to a long list of potential suppliers is roulette, and is unlikely to help breed a long term relationship with a trusted partner.

Effective international research requires quick, clear two way communications and timely input from local project managers. To avoid delay, embarrassment, wasted budget and unhappy clients, it’s wide to consult trusted in-market researchers before defining appropriate methodology, sampling procedures, or logistic solutions.

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Today we have a very interesting article taken from B2B Marketing, it discuses issues how B2B loyalty providers must hone their offerings. Here at B2B International a third of all market research commissioned with our company is customer satisfaction and customer loyalty research. To learn more about how we can help you win and maintain customers for life visit B2B International Customer Satisfaction.

B2B Loyalty providers must hone their offerings

Maintaining customer loyalty is an increasingly important part of most B2B marketer’s jobs, yet many practitioners are ignoring the opportunity presented by B2C-style dedicated loyalty programmes. This is according to new research by B2B Marketing in association with nectar for business, which found that whilst 80 per cent of practitioners describe customer loyalty as ‘critical’ or ‘very important’ only 20 per cent have actually utilised formal loyalty programmes (see figure 1).

The results suggest that cost or pricing of such dedicated programmes is not a major factor in many B2B marketers’ decision not to utilise them as it was cited by only 14 per cent of respondents. Indeed, the sums being invested in loyalty are significant: the majority (70 per cent) spend at least 10 per cent of their budget on loyalty initiatives.

By contrast, ‘rewards not appropriate to my customers’ was identified as the largest single reason for not using formal loyalty programmes, selected by 40 per cent of respondents. This suggests that programme providers have more work to do to tailor activity and rewards to specific audiences in particular. Nectar for Business, for example, which is the largest programme focused on the B2B space, is mostly targeted around the need of SME members, rather than those in large corporate, and its proposition is designed accordingly.

Broad Interest
Although uptake of loyalty programmes in B2B is not yet widespread, marketers remain broadly open-minded about them. When asked if they believe there is a place for loyalty/incentives programmes in B2B (figure 2). The largest group – just under half – replied with an unqualified ‘yes’, whilst the second largest segment suggested they were relevant ‘but not in my market’. Of the remainder, a further quarter said they were ‘not sure’ whilst only three per cent said ‘no’ outright.

Of those companies not currently using loyalty programmes, 14 per cent said they were ‘currently investigating opportunities’.

Again, the onus would seem to be on the loyalty providers to understand and cater for specific needs of these marketers, and this would seem to be borne out by further results, which demonstrate ‘ability to customise’ and ‘reward/redemption opportunities’, which are the two most significant factors in companies’ selection of a loyalty programme. Ease of operation was next in line, with 21 per cent, whilst ‘strength of brand’ only attracted 13 per cent.

This is reflected in the question regarding choice of loyalty programme, with ‘inhouse programme’ providing the most popular provider (45 per cent) and ‘gift vouchers’ coming second (27 per cent).

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The Financial Times had an interesting reader’s question in it over the weekend. Someone wanted to know how they could value how much the brand of their business was worth. You can see below how the answer suggests that it is truly difficult.

So, it is, but not so difficult that you can’t put a value on it. When selling a company, it is easier to value the brand than at other times as this is the occasion when the brand is simply valued by how much someone is prepared to pay for it. For example, when Nestle bought the Rowntree Mackintosh plant at York in 1988, only a fool would say that they paid the hefty sum for the bricks and mortar. And if Nestle hadn’t been interested, some other company would because Rowntree Mackintosh’s stable of brands included Kit-Kat, Polo, Fruit Pastilles, Black Magic and Quality Street – to name but a few.

Now whether the “Groovy Food Company”, the subject of the reader’s question, is worth a hefty premium is more conjectural. How well is it known? How loyal are its customers? What premium will people pay for its products? Answers to these questions are possible from market research and if they are all very positive, there could be a good premium to pay.

If this is a subject that interests you, be sure to read the final chapter in our free book in branding where Paul Hague discusses how to value brands.

Hold out for what you believe your business is really worth

By Jonathan Moules

January 27 2007

Q. When approached by either an investor or a buyer are there anyindustry rules of thumb that govern how the perceived worth of the actual brand is calculated over and above the hard financials of a business that is very much brand led? Rosie and Guy Hayward, The Groovy Food Company

A. The simple answer is no. Several ways of measuring brand value can be proposed early in the process, but these tend to go out the window once the hard process of negotiation begins.

You need to examine carefully the motivation of the potential investor or buyer. Investors only interested in making a quick return and buyers only interested in removing a competitor should be studiously avoided.

In the early stages of a negotiation, it’s common for the potential investor or buyer to suggest a high value for your brand. This is what the entrepreneur wants to hear and “paper money”, the figures on the balance sheet, suddenly becomes “real money”, the stuff you can use to buy expensive cars and houses.

Once you’re on the hook, the negotiation process becomes progressively tougher and the investing in or buying of a company magically produces some excellent reasons for a lower brand valuation. Doubts are expressed in the longevity of your business and that however good your brand is, it can be destroyed overnight. Remember Gerald Ratner?

The key is to hold out for what you believe you are worth and, most importantly, not to let the negotiations distract from the day-to-day running of the business.

Just as important as the company brand is the personal brand of the entrepreneur. The investor or acquiring company will often want the best of both worlds, preserving the illusion that entrepreneurs are still as active as before while gradually phasing them out of the business.

A draconian service contract will be proposed, with several onerous clauses designed to prevent the entrepreneur setting up in direct competition.

Good legal advice is crucial here, and my best tip is to hire a law firm at least as tough as those working for the potential investor or acquirer.

You should plan your exit carefully, well in advance, not as a knee-jerk reaction to an attractive sounding offer.

Entrepreneurs should gradually remove their own personal brand from the company, appointing professional management that can take over the day-to-day running of the business. This in itself will add significant value to your company.

These should be seasoned professionals who have been several times around the block and will be immune to any sharp practices in the negotiation process. And with a dispassionate eye, they are more likely to get a desirable valuation on your company’s brand.

This answer was from Mike Southern, co-author of The Beermat Entrepreneur

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