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MARKET ACCESS ADVISORY
Global Manufacturer Overcomes Expansion Challenges
A global manufacturing powerhouse had a toehold in China but sought to enter the Chinese market in a much larger way. However, the company had encountered a number of challenges that it was having difficulty overcoming.
The company approached Sierra Asia for assistance in creating a government affairs program and acquiring a local firm. The company had already commissioned a market study and had selected several potential partners, but had been unable to decide on or close with any of the candidates. The company also faced a variety of unfair trade practices perpetrated by an East Asian company in China that were harming our client's interests not only in China but in the United States, as well.
Government Affairs Strategy
Drawing from the relationships we built during years of negotiating trade agreements and working through our partners on the ground, we created a multi-faceted government affairs strategy. As part of that strategy, we introduced our client to senior officials in the trade and other related ministries, industry associations and circles of influence, i.e., officials inside and outside of government who can influence public opinion and policy in a particular area but are not line-regulators.
Working at the director-general and vice-minister levels, we helped the client convince the trade ministry to launch inquiries into the unfair trade practices of our client's East Asian competitor and partnered with the trade associations to discourage the competitor from continuing its practices.
To improve the client's market position, we also reached out to the U.S government, including the Departments of Commerce and State and the U.S. Embassy in China, to carry our message to the appropriate Chinese officials.
Lastly, we helped our client secure the services of a specialty law firm, whose founder had worked in the Chinese trade ministry for many years and who understood the relevant legal and regulatory issues, having drafted many of those laws while in office.
Simultaneous with development of the government affairs strategy, Sierra Asia worked with our client to fine-tune its strategy for acquiring a local company. We assisted company executives to better understand possible target companies and the complex issues that surround the acquisition of a state-owned enterprise, particularly since one of the target companies was going through a government-mandated restructuring. We also analyzed the local economies and their prospects for growth and assessed the potential support from government officials in the relevant regions.
After our client selected an acquisition candidate in a southern Chinese province, Sierra Asia identified the local government that owned the company and worked at senior levels with the provincial assets administration, trade bureau and related agencies to ease the way for the purchase. We also helped local officials understand the issues most important to our client, explained the context for the acquisition, and fostered relationships between our client and key stakeholders.
To ensure that every detail of the transaction was addressed, our principals met with key provincial and central government officials to learn what lay behind the government-mandated restructuring. In turn, we shared the knowledge we gained with our client so that they would have an accurate understanding of the process -- and make better informed decisions about the purchase price. The time spent was essential to our client's understanding of the differences between local practice and the precise language of the statute.
For various reasons, our client ultimately elected not to move forward with the acquisition. To ensure they would keep the door open for future investment and acquisition opportunities, we spoke with local and provincial government agencies to explain the rationale behind our client's decision. Finally, when our client turned its attention to a new and more attractive acquisition target in the northern part of the country, we helped the company create a similar network with those local authorities.