Young, diverse, innovative and female
Expert says Chinese companies in UK that allow local autonomy tend to be most successful
The fastest-growing Chinese-owned companies in the United Kingdom come in all shapes and sizes - although a look at the executives reveals that they do share some things in common.
Boards are typically gender diverse, younger and willing to work alongside local management to enhance innovation, according to the authors of a new report released by accountancy firm Grant Thornton.
The Grant Thornton Tou Ying Tracker 2016, produced in collaboration with China Daily, is a compilation of the 30 fastest-growing Chinese-owned firms in the UK.
At Chinese state-owned enterprises on the list, 12 percent of board members in the UK are female. The boards of private Chinese-owned companies in Britain are 6 percent female. Both levels compare favorably with the 5.6 percent of board positions occupied by women at companies listed in the FTSE 250 Index.
Three companies in particular stand out for their gender diversity. Four of 13 board members at ICBC Standard Bank are women; two women sit on telecom giant Huawei's seven-strong board; and Bank of China subsidiary China Bridge Group has an all-female board.
The board members at fast-growing Chinese-owned companies in the UK are also younger on average than their British counterparts. In the UK, the average age of nonexecutive directors is 59; for executives it's 52. The average age of board members across the companies on the Grant Thornton list is 48.
In terms of management strategy, Simon Bevan, head of the China Britain Services Group at Grant Thornton and co-author of the report, says the Chinese companies that give more autonomy to their UK entities during and after mergers or acquisitions tend to be more successful than those that govern more rigidly from afar.
"Those companies that have devolved power in order to ensure that the acquisition is well integrated are, in my experience, more successful than those that make an acquisition from China and try to run it from China," Bevan says. "The ability of the people on the ground to make real-time decisions and to be more dynamic is a big factor in ensuring integration."
Bevan points to Fosun's 2015 takeover of nursery product brand Silver Cross as an example of a successful acquisition in which a Chinese company worked alongside an existing UK management team with limited interference.
Eight of the 14 private companies on the 2016 list are products of the M&A process, and such deals can be expected to continue in 2017 as more Chinese companies look to go global, says Angus Knowles-Cutler, China Services Group Chairman for Deloitte.
"I think there will be even more focused M&A activity from China in Europe in 2017 - and quite a lot of it. And it's going to be increasingly professional," Knowles-Cutler says. "I've seen in the past year or two Chinese businesses becoming much more professional with their merger and acquisition activity in Europe. They are taking due diligence more seriously; they are increasingly making sure what they buy is a good strategic fit."
Bevan, however, encourages Chinese companies in the UK to adhere more closely to administrative regulations, particularly as the market becomes more competitive and the Chinese presence in the UK becomes more established.
"One particularly striking thing was the high proportion of late filed accounts," Bevan says of the Chinese companies researched by Grant Thornton. "Out of 280 companies, 30 percent were late in filing. It's not the most important aspect of governance, but it's a quantitative aspect that you can say points to the fact that there is not as strong a focus on good governance as is the ideal."
( China Daily Africa Weekly 01/13/2017 page30)