The Dutch have generations of experience in world trade. Naturally, they are at the vanguard of world efforts to do business with China. Royal Philips Electronics (NYSE: PHG) is a major global corporation from Holland. It has built a strong presence in the patient monitoring market of China. April 2008 has been a watershed month for Philips in China. It acquired all shares of a domestic competitor in China. The Philips website describes the logic for the deal. There are three relevant lessons in this historic transaction:
1. China business demands local expertise. Even world leaders need help to strengthen their China trade links. Shenzhen Goldway Industrial Incorporated, which Philips has now acquired, has invaluable linkages with healthcare networks and influencers in China.
2. Products produced in China are relevant for the entire world. Philips has discovered that local equipment designs of Shenzhen Goldway Industrial Incorporated are appropriate for all emerging economies. Besides, the acquired company has products approved by regulators in the US and Europe.
3. Shenzhen Goldway Industrial Incorporated is as excited about the deal as Philips. They believe that they are equal gainers in their acquisition. Philips will give them accelerated world exposure which they could not have managed as well alone.
You may not be in the patient monitoring business. However, the acquisition of Shenzhen Goldway Industrial Incorporated is a case for everyone who wants to trade with China to study.
By the way, Philips has made other strides in this vast market. It seems to be part of a broader plan between Holland business and China.
