Growth overseas can boost domestic activity

China's central government should establish clearly its role as a special type of market research agency, specializing in the identifying attractive international market opportunities for China's army of increasingly ambitious and expansionist companies of all sizes and sectors. In addition, China's central government should present supportive finance and training packages to those Chinese companies willing to take advantage of any suitable overseas expansion opportunities.

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Successful international expansion will lead very quickly to numerous benefits to the Chinese economy. Both Shuanghui and Sanpower pledged that immediately following their cross-border takeovers, they would introduce premium foreign brands to mainland China, which should serve to stimulate domestic consumption.

The takeover of well-known, successfully built foreign brands such as Volvo (Geely Automobile, 2010), IBM PCs (Lenovo, 2005) and Guangming Foods (Weetabix, 2012) will also provide a path for Chinese companies to follow toward a more modern, market-oriented, brand-focused business model.

Six out of 10 takeovers are unsuccessful, and cross-border acquisitions present additional cultural complexity and challenges.

Only with active support from China's central government can Chinese companies cement effective cross-border takeovers and build an international presence.

Central government intervention and support, however, should not be interpreted as a "handout" but as a "hand up" the international corporate ladder.

Government-led analysis and targeting of the more developed international markets should take priority with particular supporting of finance and training packages available to the more entrepreneurial Chinese companies.

Greater understanding of the international business environment will also enable China's central government to engage and integrate more with the world economy, which will also prove beneficial to long-term growth domestically.

The author is a visiting professor at the University of International Business and Economics in Beijing and a senior lecturer on marketing at Southampton Solent University's School of Business.

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