Jinjiang Group: Globalization through State Ownership and Political Connection

Description

Since its founding in 1951, Chinese state-owned Jinjiang International (Group) Company Limited (Jinjiang) had become a leading international company in the travel and hospitality industry with business divisions in hotels, transportation, travel, realty, investments, and finance. The Jinjiang brand was well-known in China, and the group had been pursuing a conservative investment approach. However, in response to the Chinese government’s “Going Global” and “One Belt and One Road” policies, and in order to strengthen the firm’s international competitiveness, Jinjiang made a series of aggressive mergers and acquisitions between 2014 and 2016. The acquisitions—especially those of two large hotel groups—had worsened Jinjiang’s debt position, while integration was proving difficult due to the acquired firms’ different corporate cultures and values. The hospitality market was also becoming mature and highly competitive; host-country governments were increasingly wary of foreign state-owned companies acquiring domestic assets. How could Jinjiang overcome these challenges to achieve its aspiration of building a world-class brand, while fulfilling the Chinese government’s political agendas through a series of aggressive globalization efforts?

Learning Objective

This case is intended for senior undergraduate and graduate business school students in courses such as international market entry strategies, mergers and acquisitions, competitive strategies of emerging market firms, and globalization of state-owned enterprises. The case study will help students understand the following issues: ·Motivations and paths that emerging market firms use to catch up and compete with global firms ·The role of emerging market governments in driving domestic companies’ globalization to fulfill national political agendas through state ownership and political connections ·The legitimacy of foreign state-owned companies investing in host countries through acquisitions ·The different motivations of state-owned versus private companies for pursuing globalization ·Common financial and integration issues following mergers and acquisitions ·Competitive strategies in mature and consolidated industries

Keywords

emerging market Globalization Government relations