Post-acquisition integration challenges for Chinese companies in India

Acquiring a promising Indian company has emerged as one of the most attractive ways for a Chinese company to enter the Indian market. This strategy overcomes the challenges of making a greenfield investment and setting up distribution and supply networks from scratch.

It can potentially reduce the gestation period for market entry from several years to a few months. However, the success of an acquisition depends as much on the post-acquisition integration as it does on the pre-acquisition steps of screening targets and conducting due diligence on them.

The challenges faced by a Chinese company in integrating with the target and realising synergies of an acquisition can be categorised into two broad categories: a) business model challenges; and b) corporate governance challenges. These categories correspond to challenges faced by the Chinese company in the external market environment and on the internal corporate side, respectively.

Santosh Pai and Nusrat Hassan are partners at D H Law Associates. D H Law Associates is the only full-service Indian law firm with an active China practice since 2010