The shift to using acquisitions to win both at home and overseas brings with it new and more complicated rules for success. Some companies have watched their deals falter, turning into cautionary tales. CNOOC invested too much in acquiring upstream natural resources, underplaying the risk from the oil price fluctuations that soured its $15.1 billion purchase of Canadian oil and gas producer Nexen. When CMCC bought Paktel, Pakistan’s fifth-largest telecom operator, for $460 million in 2007, the acquisition faltered for many reasons. It lacked a clear investment thesis, for example.
An expanding group of Chinese companies is learning how to avoid such mistakes, however, by applying more rigor to their acquisitions. For example, soon after a consortium including Shanghai Fosun Pharmaceutical acquired Ambrx, a US biopharmaceutical company, in 2015, Fosun named a new CEO and a new chief science officer for Ambrx, both of whom have strong US and China experience and were deftly able to handle the usual cross-cultural issues that surface during most outbound deals.