Can Huarun'S Acquisition Of Tesco Reload System Succeed?

In May 28, 2014, the joint venture between China Resources Enterprise Ltd of the parent company and Tesco of the United Kingdom was approved by the government. Tesco will subscribe to 20% of the 134 joint ventures and 19 shopping malls and 4 billion 325 million HK dollars in cash, and Huarun venture holding 80%.

Six months later, the restructuring finally took a substantial step - Huarun stores 103 stores and Tesco 15 stores first began to switch sales system, the two stores will achieve goods, procurement, inventory, financial and other aspects of the docking.

Thereafter, North China, Northeast China and East China will be referred to in succession.

This is an unprecedented acquisition.

All along, in the Chinese market, foreign investment has taken a hit and fall, such as entering an unbounded environment. Today, Chinese retail enterprises are fighting against the trend and have launched a counterattack against foreign giants.

This has also created the biggest restructuring of China's retail industry.

Huarun Wanjia and Tesco are the central enterprises with a history of 30 years of retail development, one with 95 years of foreign capital, one of the largest supermarket chains in China and one of the third largest retail giants in the world.

After the merger, Huarun's sales revenue is equivalent to the sum of WAL-MART and Carrefour in China, almost all provinces in the country can occupy the first place.

4 years ago, WAL-MART had bought and sold Taiwanese capital companies, but the fusion between them is far from expected.

Although Huarun Wanjia group started to buy and buy almost every year, it can face the third largest retail giants in the world. Facing many aspects far ahead of its advanced Tesco, it is still a great challenge for the two to avoid repeating the same mistakes.

Shortcut to pformation

This restructuring will also start in May 29, 2014.

On the second day when the joint venture was approved by the Chinese government, every employee in Tesco China received two e-mails.

The previous one was written by Tesco CEO Philip (Philip), the last one from Huarun Wanjia CEO Hong Jie.

In the letter, Philip said, "we have completed the signing process of a joint venture with Huarun venture, and the two sides will jointly build the largest food retailer in China.

This is the beginning of the new start. The combination of Huarun's local knowledge and our global wisdom will make the joint venture have excellent competitive advantages and long-term development potential.

For the first time, Hong Jie said to Tesco employees, "from now on, the joint venture between China Resources Enterprise Ltd and Tesco will begin to operate.

The establishment of the joint venture is an unprecedented fusion of Chinese and Western culture. I look forward to working with you to jointly promote the prosperity and development of China's retail industry. "

Seeing here, every Tesco employee realizes that Tesco has changed hands, and the long-standing grand integration is about to begin.

The two companies are competitors, and employees know that there are huge differences between the two sides.

In China, Hua Runwan has more than 3800 self owned stores, including five hundred or six hundred large stores, 260 thousand employees, and sales of over 100 billion yuan. Tesco has 135 large stores and 26 thousand employees, but it is only ten billion scale because of acclimatization.

However, Huarun Wanjie CEO hung Jie believes that the greater the difference, the higher the complementarity.

In the eyes of outsiders, Tesco China has been deeply losing money. It is a great loss of financial risk and the risk of collision between Chinese and Western businesses.

Many times in the company's internal logarithm one hundred thousand

Analyzing the plight of the current retail industry, the enterprise has gone through 30 years of development and has entered 100 billion threshold, but the market has also undergone profound changes: macroeconomic slowdown, downward pressure, consumption growth is weak, public consumption is curbed, labor costs rise, store rents rose, network channels rise, and impact on traditional markets.

In addition, the industry predicament of "the average profit margin of China's retail industry is only 1%" has exacerbated the pressure of survival. "Finding a pformation path" has become an old-fashioned but popular choice.

Just when Tesco, who was deeply depressed and unable to extricate himself, wanted to sell his business in China, Hongjie suddenly found a shortcut.

In Hongjie's view, the Tesco global supply chain system can help enterprises to achieve internationalization and go global strategy. Powerful IT system and customer analysis capabilities can accelerate the pformation of enterprises from business channels to commodities and business customers, and the operation experience of electric providers just meets Huarun's "electric shock" development needs.

Tesco's lack of localization experience and 100 billion sales scale in China is exactly the director of Huarun.

This is the threshold that China's largest chain supermarkets have to "survive", and the pformation of external environment is becoming more urgent.

Faced with the slowdown in the macroeconomic situation, the lack of consumption growth, the rising labor costs and the impact of new channels for Internet traders, Huarun 10000, which has gone through a history of 30 years, is in urgent need of the pformation of foreign mergers and acquisitions.

Through mergers and acquisitions and loan fusion to promote enterprise pformation, this has formed a clear change "shortcut" in Hongjie's mind.

He used "The end ofthe beginning" to describe the current environment and current situation of Huarun's family.

This is the title of speech delivered by British Prime Minister Churchill during the battle of the World War II to celebrate the battle of the battle of Al Armen (Allied forces' strategic offensive against strategic defensive pformation).

Coffee and tea

The reorganization of Huarun Wanjia and Tesco, equity joint venture is only a ticket for cooperation. It is the purpose of cooperation to realize the integration of both parties and promote the pformation of enterprises.

In 2010, WAL-MART bought and sold Taiwanese capital enterprises and became a sensation.

But the original goal is far from being achieved, and the rumors of internal friction and disharmony are endless.

This time, Huarun Wanjia is not as optimistic as Tesco's redevelopment prospects.

After May 29th, Huarun Wanjia staff began to take the initiative to get in touch with Tesco.

Liu Changsheng, director of Forensic Administration in Hua Runwan's Southern District, recalled that the first time Huarun officials had been in contact with Tesco.

"When we entered Tesco, we all had a learning attitude, because the other side surpassed us in many ways.

The impression that Tesco gives us is that there is a strong sense of foreign capital everywhere, not only in the office environment, but also in the details from the front desk lending, cultural propaganda materials posted on the wall, conference organization and so on.

Liu Changsheng believes that the problem of joint venture between Chinese and foreign enterprises is the compatibility of eastern and Western cultures.

No wonder Tesco, after buying Tesco from Dingxin International Group, made China one of the most important markets and worked out an ambitious China plan.

Over the past 10 years, hundreds of top executives and experts from around the world have implanted pure British culture into the Chinese region, which has penetrated into the "capillary" of enterprises (see the third global retailer Tesco evacuated from China) in the current period. This makes Huarun 10000 and Tesco have huge differences.

Tesco follows the British enterprise management, implements centralism, believes in standardization of management and standardization of processes, and has absolute power in headquarters and in China. Large areas and stores are only executive implementers of decisions. For example, procurement has carried out nationwide unified procurement but has lost local characteristics; Huarun has implemented regional responsibility system, with considerable autonomy in the region, and the proportion of commodities purchased between headquarters and large areas 6:4.

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Because of its centralization, Tesco always requires employees to comply with the rules and regulations, and the implementation decisions are not discounted. Huarun advocates more people's initiative and encourages employees to change and innovate.

On the contrary, Tesco's culture is highly inclusive of employees, giving employees a high degree of freedom. For example, in the morning, they usually do not strictly limit time to work. For business purposes, a single room can be allowed to ensure personal privacy, which is more respectful to personal holidays. But Huarun million needs employees to punch in and sign in when they go to work.

This difference is also reflected in the difference between employees' salaries and benefits. Tesco as a foreign-funded enterprise, salaries are kept secret, but it is widely spread among employees of both sides. The argument is that the salary of Tesco employees of the same level is two to three times that of Huarun.

However, even for excellent employees, Tesco foreign executives do not agree to give monetary rewards; while Huarun excellent employees can receive tens of thousands of awards at the annual recognition incentive conference.

In Tesco, vehicles belong to executive individuals, mostly Mercedes Benz BMW, the driver is a service-oriented work, will choose to recruit near the senior management residence, for the convenience of shuttle bus can drive home; but Huarun is the central enterprises, people and assets must first comply with the system constraints, the bus can not be used privately, after work, the bus is in storage.

After restructuring, part of the Tesco vehicles were also auctioned off.

Even in terms of address, there are obvious differences between central enterprises and foreign capital.

Tesco executives are equal with their employees. Employees comply with the British habit of facing CEO by calling their names, and their employees are also commensurate with English names. They can be clearly expressed in the name of Huarun in some central level enterprises.

The difference between central enterprises and foreign capital, Huarun Wanjia and Tesco is described by Hong Jie as "tea and coffee".

In his eyes, there are deviations between Chinese and Western cultures and mutual understanding.

People in different countries have different opinions on how to deal with things in different legal systems.

This difference requires more standing in the other's perspective.

In order to achieve integration, Hong Jie launched a "Long March" project in Huarun's interior.

He warned employees that the "Long March" project has a long span and is expected to be three years. It is difficult and involves many departments. It needs to accept a new team with a tolerant and open mind and achieve the combination of global wisdom and local experience.

Unprecedented integration

The key to any restructuring is cultural integration, and the key to cultural integration is the integration of personnel.

Before the reorganization of organizational structure, information system switching, supply chain integration and so on, Huarun's first place is the resettlement of personnel.

Liu Changsheng, director of Forensic Administration of Hua Runwan's Southern District, was introduced.

At the beginning of the joint venture, hung Jie once promised every Tesco employee, "in the course of integration and development, the joint venture company will respect the feelings of every employee, care about the development of every employee, listen to every employee's opinions, deal with various matters involving employees' interests, and maintain the stability and continuity of human resources policies."

Before the joint venture, Xie Ming, manager of the original grocery Department of Southern China Tesco District, was receiving training before promotion. The reorganization led him to worry about the termination of the advanced plan. For this reason, he also asked the Tesco Human Resources Department of China.

In October 2014, third months after the reorganization, he was promoted to the general manager of Tesco, Shenzhen Longcheng store.

The former predecessor wanted to return to his hometown in Jiangxi, and Tesco had no stores in Jiangxi. The new owner pferred Huarun to Wanjia river.