Transnational Governance of Zoomlion’s Acquisition of Italian CIFA

How a state-owned engineering machinery company conducts transnational governance when internationalizing through transnational acquisition is a topic worth probing. This case study focuses on Zoomlion, one of the leading enterprises of engineering machinery industry in China. Beginning with the background and process of Zoomlion’s acquisition of Italian Compagnia Italiana Forme Acciaio (CIFA), the case study then takes a close look at the acquisition, specifically the transnational governance mechanisms of the stakeholders during acquisition and the governance of board of directors, top management team and parent–subsidiary relationship following the acquisition. Zoomlion successfully achieved 100% acquisition of CIFA in 2008, through appropriate stakeholder governance. Zoomlion’s innovative transnational governance also brought about changes to its own corporate governance structure as well as progress in its internationalization. Zoomlion succeeded in post acquisition integration, through governance of stakeholders, top management team, board of directors and parent–subsidiary relationship, and all parties harnessing the resulting synergy. Of all the governance efforts, the governance of co-investors was a key embodiment of Zoomlion’s capability as an international company. Among Zoomlion’s typical transnational governance tools are corporate restructuring in CIFA, and approaches in the parent–subsidiary relationship governance as the “1/2/3 promise,” “three-person group,” and “synergy office.” Zoomlion’s acquisition of CIFA also instigated changes in the corporate structure of Zoomlion. The transnational governance approaches adopted during and after the acquisition produced a win–win outcome for Zoomlion and CIFA.