Hao Jianming: Business strategy with the wave of M&As

This year has been a blowout year for China's mergers and acquisitions. In the tech industry, Alibaba wholly acquired Youku Tudou and in the real estate industry, Shenzhen Huaqiang merged with New Mango Real Estate.

Industry giants are scrambling to build their own complete ecosystems through frequent mergers and acquisitions. However, small companies seem to be left in the wake, facing a more gloomy outlook.

Hao Jianming, chairman of the board and CEO of Wins Finance Holdings Inc, which offers financial services for small- and medium-sized Chinese companies, expressed his confidence in the Chinese market in an exclusive interview with China Daily website.

1. With over ten years experience in entrepreneurship and being quite successful in management, investment and finance sectors, how did you establish your management philosophy?

A: I believe in accumulating work experience and then gradually forming your own management philosophy.

I had been working for Huawei for a period when I was young, which brought me different ideas about business management and got to know the philosophy of business management. I worked with international consulting firms, such as PWC and IBM, to help Huawei establish their corporate governance practices and standards, which was a valuable experience to me to understand the methods of business management.

Then I constantly thought about and carried out my philosophy of business management and standardized methods. After a time of improvement and development, I gradually formed my own corporate governance system and style.

When I realized corporate expansion through M&As, I had to reengineer systems and processes in business management to implement my philosophy of value investment.

When a company encounters difficulties, mergers are undoubtedly the best medicine to achieve collaboration and expansion. However, the business management philosophy of system and process reengineering is the actual catalyst for the effect.

2. Could you please share your ideas of M&A and some M&A cases?

A: In fact, I got to deeply understand the significance of mergers when I dealt with the DICHAIN investment case. I witnessed some enterprises come back to life because of mergers and acquisitions. M&A have some special effects on companies, especially those in difficulties. Through mergers and acquisitions, some enterprises which were not doing so well were reborn or increased their strength.

However, the integration of M&As and business operations is not an easy task, especially in China. Failures are often seen as due to bad collaboration after M&As. That's the reason why many Chinese enterprises are afraid of M&As.

I respect the M&A philosophy of value investment and control. Operations and competition require you to get controlling holdings, as you seek to exert significant influence on the operation and financial decisions of the acquired company.

The core of getting controlling holdings in M&As is to output the ability to judge the industry, management capacity and resources, and affect the acquired company in all respects, making up its deficiencies with my strengths.

So in my daily work, I implement the philosophy of getting integration through M&As, getting collaboration through controlling holdings and adding value through management.

Take Deyu Agriculture for example, a leading Chinese company specializing in cereal R&D, cultivation, production, processing and marketing services and corn trade.

At first Deyu Agriculture was just a small local enterprise in Shanxi. Through acquisitions of several regional small businesses and integration and transformation, I made Deyu Agriculture a listed company. Its business expanded nationwide after five years and sales jumped 10 times.

Deyu Agriculture transformed from a regional small business into an integrated public company with a professional management team and technology. That's the charm of M&As.

3. What is your outlook for the China market?

A: I am very confident about the Chinese market and determined to build a financial ecosystem.

Although China's economic growth is slowing down, the nation saw improving efficiency and more creative business models and transformation from traditional industries to emerging industries. The wave of M&As and Internet finance showed that the Chinese market is getting mature.

Over the years, I have been observing the role of traditional non-bank financial firms, such as firms dealing with guarantees, leasing, factoring business, in China's economic development and their drawbacks and values.

What Wins Finance Holdings Inc wants to do is to merge and integrate these small traditional financial companies and graft on Internet finance and high-end wealth management ideas of the era, making it a competitive financial holding group.

In April, we successfully acquired several small traditional financial companies and integrated them into a financial holding platform which got listed on NASDAQ in the United States. We want to help these small traditional companies overcome the risks during the economic downturn.

Wins Finance made a fundamental change of the company value, from focusing on only capital return to experience and feelings of both the capital owners and users on the platform. The change will transform traditional financial companies into new competitive financial companies in line with characteristics of the era.

With innovative ideas, Wins Finance will change the operation and profit model of traditional Chinese finance companies and play a significant role in China's economic transformation.