The China Business Venture is in Distress – Now What?
Eroding sales, tight cash flows, mounting inventories and returns, erratic and urgent changes in priority—these are all symptoms of a company in distress that demand prompt and decisive action. IPO Pang’s distress management group—comprised of legal, accounting, and business professionals—is dedicated to helping foreign companies analyze and rectify the true causes of distress.
IPO Pang: We’re Here to Help
When a Chinese venture is in distress, management needs to quickly determine its true causes and implement an action plan. This process is most effectively accomplished through an independent and objective third party familiar with both western and Chinese laws, business practices and cultures.
The IPO Pang team is comprised of experts in law, accounting (including forensic accounting), management, and regulatory affairs who perform a three-phase process to investigate and analyze the distressed venture, identify potential solutions, and implement them. Depending on the nature of a venture’s distress, we can also leverage IPO Pang’s network of government relations and influential business leaders to help bring about simple rational solutions that just need just a little “nudge” or encouragement from the right parties in order to succeed.
We help distressed foreign-owned ventures in China to restructure, re-organize, re-capitalize and change course through a range of services:
- analyzing the root causes of distress
- formulating and implementing turnaround options, which may include:
- marketing and distribution changes
- installing temporary and permanent management changes
- identifying and qualifying new partners
- sourcing cash
- identifying buyers for some or all of the venture
- wind-down and dissolution
Learn more about our services and areas of expertise. By understanding the true causes of distress, we identify turnaround solutions and then implement those solutions.
Our engagement can be as simple as analysis and production of a “state of affairs” report, all the way through to providing active consultancy, taking over as temporary management and operations, or assisting the stakeholders in divesting the venture at the highest value attainable. Where necessary and appropriate, we can also assist with finding investors who are willing to jump in to take the company to the next level.
Our client engagement model is also flexible in that we may consider partnering with the client, thereby reducing the financial burden at the outset and sharing in the future success of the restructured venture. We take pride in this mode of engagement simply because in times of distress, clients need partners, not merely service providers. At IPO Pang, we flourish in our clients’ successes, and we have been successful in this business for many years.
Time is of the Essence
The key point about distressed ventures is that they rarely, if ever, fix themselves. Quite the contrary—they only get worse and worse. Few companies have the luxury of taking a “wait and see” approach, so prompt and decisive action is paramount. When legal action is necessary, such as temporary restraining orders, orders to show cause, or other legal maneuvers, IPO Pang’s attorneys and network of litigators go into a court or an administrative bureau on a moment’s notice and obtain the necessary orders to preserve status quo or to prevent dissipation of valuable assets.
Staving Off Damage
Often distress is manifested by deteriorating employee relationships and fast action may be needed to prevent outright theft of valuable company property or worse, illegal dissemination of false allegations to industry and government alike. IPO Pang can help you manage crises like these, borne of corporate distress, ideally before they happen. In the event that damaging actions are conducted, we have the experience and know-how to limit the damage, rehabilitate reputation lost, and where appropriate, initiate legal or protective action to stave off further damage.
China: The Promise and the Disappointment
The Opening Up and economic reform policies adopted by China over thirty years ago ushered in such an era of unprecedented economic growth that today China’s economy ranks as the second largest in the world. Since the opening up process began, China’s GDP has grown over 1000 percent, and the economy continues to average 10% growth per year. China is the world’s single largest exporter and second largest importer. Poverty is declining and a new middle class is emerging.
Recognizing the opportunity posed by China, hundreds of thousands of foreign companies, large and small, have entered China.
And tens of thousands of them, large and small, have failed.
The reasons for failure are manifold—bad product, bad management, bad marketing, bad advice, bad partner selection, bad contracts, bad government relations, bad responses to shifting market needs, unrealistic expectations—the list goes on and on.
Often the failure is not in product or service quality, but in a failure to adapt to local needs and customs. Our record of assisting companies in distress has proven that we have the right combination of experience, background and business savvy to help foreign-owned Chinese enterprises either right their ship or divest with maximum value.
IPO Pang has helped many foreign enterprises weather their Chinese storms, and we can help you too. We welcome you to contact IPO Pang about your situation, our services, and your options.