1. A weak sense of law
The mining companies that go out have a problem of weak legal awareness, ignoring the legal soil of cultural thinking; the legal consciousness is lagging behind in the investment area and the choice of partners.
Precautions
Legal thinking should be made instinctive. The law is the skeleton, not the details, the technology, not the intuition. Legal traditions and rigid thinking must be incorporated into legal applications.
International mining mergers and acquisitions often involve multiple countries, so the relevant regulations and policies are also complicated. Not only must we abide by the laws of each country concerned, but we must also learn to choose and apply when laws conflict between different countries. In the field of mining law, only by always analyzing and thinking about problems with mining ownership, management rights and product sales rights can we get a clue in the complicated legal regulations.
In the process of international mergers and acquisitions, we must always maintain an international legal awareness and maintain close ties with legal service agencies in various countries to avoid losses caused by lack of understanding of laws and policies. Pay particular attention to the differences in legal systems between different countries. For example, the United States, Canada, and Australia are secondary legislative systems, and provincial and state powers are greater than the central government in some respects.
After many years of overseas mergers and acquisitions, at present, for many large enterprises, overseas capital investment and management are no longer a challenge, but how to deal with the thinking and ways that local people can accept in a strange country. Labor relations and good government public relations are the real difficulties. International thinking to examine mining mergers and acquisitions, and then use the other side to welcome and accept the exchange, negotiation and integration after mergers and acquisitions, in order to prevent the company's overseas mergers and acquisitions from obstacles caused by differences in thinking.
2. Existence of power is better than thinking of law
Going out of the enterprise, the idea of ​​seeking power over the law is widespread.
Precautions
Get rid of the official position and seek help from lawyers. Consult a professional lawyer with mining experience. Recruit lawyers by considering and balancing factors such as scale, professionalism, responsibility, importance, language, fees, and coordination.
3. Do not understand the rule of law in the host country
Degree and history
There is no relevant legislation or legal deficiencies in the host country; the host country is in a sensitive period of religion, transportation, strategy and resources.
Precautions
To diplomatic consulates, international relations agency, has invested in business consulting, pre-inspection; Do not enter dangerous areas; precautions must be prepared to enter dangerous areas: non-controlling stake, funds quickly reflux, trade priority investments, personal assets of funds Issues such as rapid evacuation channels should be considered.
It is necessary to pay attention to the history and execution of the rule of law in the host country, such as the United Kingdom, Australia, the United States, and Canada. These countries have a long history of rule of law. This sense of rule of law permeates their blood. For example, at home, business owners meet with lawyers. There is no charge, but in these countries you need to ask if you want to pay, if you don't pay, you need to get a prior confirmation. Therefore, such differences are reflected in all aspects, manifested in the acquisition of laws and regulations and so on. In addition, we must also consider whether laws, regulations and policies can be clearly identified and easily accessible.
At the same time, it is necessary to clearly identify the mining laws of the host country, whether it is written separately (established) or scattered in many laws and regulations (departments). It is not that every country has a separate documentary mineral resources law, some names are different, and different regions are different. It is very necessary to find a local lawyer to consult.
In addition to mining laws, we must also pay attention to laws and special regulations such as investment, monopoly, national security, and economic security review. These laws and regulations are not uniform, some countries have, some countries do not, some countries are written laws, and some countries are policy provisions. If these conditions are not clear, it will cause a very embarrassing situation for the company, so it is necessary to make a good plan ahead.
4. blindly pursue the scale of the law firm and
Lawyer fame
Some companies that go out think that lawyers and law firms are getting as cheap as possible, but this is not the case.
Precautions
Professional, responsible, and best match! Hiring a large law firm or a small lawyer, high fees or low fees are not certain. For example, if the company is small, but hires a barrister, he has no time to take care of the details. Sexual problems, even these costs are very high, directly squeeze the operating expenses, so to find a "door to door" lawyer, usually the law firm is better, but everything is starting from reality.
Professionalism is more important than scale. Some law firms are very professional, such as environmental lawyers and mining lawyers. If companies have the ability to integrate, it is not unreasonable to find a law firm.
Responsibility is very important. Some parties pay for the barrister, but the barrister uses his intern to complete the work, and even does not see the barrister. This shows the importance of responsibility in handling the case.
5. Not good at using financial instruments
Some enterprises ignore the capital market, all of which are direct investment by themselves, and do not use financial instruments. When funds are insufficient, they rely entirely on financing instruments to increase investment risks.
Precautions
Must be familiar with the use and training of talents, establish or combine investment and financing teams, in order to understand and understand domestic and foreign related financial instruments and policies; make good use of international capital markets and various financial instruments, and make good use of various domestic loans, funds, taxes, etc. Support policies; major projects and, where necessary, employ authoritative consulting, services, and investment banking consultants.
The importance of reasonable financing mechanisms and effective control of exchange rate risk for mining mergers and acquisitions is self-evident. As far as the international exchange rate market is concerned, the rise and fall of the exchange rate is difficult to predict, and it is necessary to adopt the means to avoid exchange rate risks. In the choice of currency, the first is to try to collect the hard currency that the exchange rate is on the rise, and throw out the soft currency where the exchange rate is declining. The second is to form a basket of currencies by using several currencies at the same time to cope with the rise and fall of the exchange rate. The third is to expand the source of funds, diversified financing can avoid the risks brought by exchange rate fluctuations. Fourth, appropriate use of forward transactions and financial derivatives such as financial futures and options to lock in losses caused by exchange rates.
6. Ignore rigid environmental laws
Ignore environmental issues and not fear nature and the environment.
Precautions
Environmental protection and community issues are the most easily overlooked issues in domestic mining mergers and acquisitions, and in countries with sound laws and developed market economies, it is precisely the bottom line that cannot be broken. If you don't realize the importance of environmental and community issues in mining mergers and acquisitions before going abroad, you will pay a heavy price.
The awakening of the aboriginal self-rights awareness has made the community relationship between investors and local residents increasingly tense. For example, Canadian Inuit, Australian Aboriginal, Mega Indian, New Zealand Maori, Finnish Lapland settlements or protected areas may present such risks. For example, in the hottest “fire circle†area in Ontario, Canada, the region is one of the few original ecological environments in the world, and now faces an unprecedented environmental crisis due to the rise of mining. Local aborigines say mining companies have abandoned their interests and are worried that the damaged lakes and swamps will not be restored. In order to alleviate the dissatisfaction of the aborigines, the province amended the Mining Act to focus on the interests of the aborigines in the form of “indigenous consultations†and to reconcile conflicts of interest between indigenous and mining companies.
In international mining mergers and acquisitions, environmental and community issues are mixed with cultural traditions and national feelings, which are far beyond the scope of law and difficult to solve. Therefore, we must establish the concept of "respecting nature and respecting life", enhance environmental awareness, build harmonious community relations, and ensure the smooth progress of M&A activities.
7. For extraterritorial mineral rights and related resources
Lack of knowledge
Some enterprises have a situation in which the legal knowledge of extraterritorial mineral rights and related resources is mixed with the domestic and unclear. It is impossible to distinguish whether the laws related to mining in the host country are written separately (established) or scattered in many laws and regulations (departments); experts who have experience in a certain field may not necessarily have a say in another region or industry due to narrow empiricism and The trust of the client has side effects.
Precautions
Consult professional lawyers with mining experience; entrust resource experts to consult; entrust the industry and regional experts involved; read and analyze reports should be serious and rigorous, and should not be taken care of. The credit value of experts is an important reference; cost factors such as grade, mining and selection, infrastructure, and market driving factors are issues that must be considered in the resource chain.
8. Not sensitive to the labor policy of the host country
Investors lag behind in policies such as local communities, labor, and the interests of the host country.
Precautions
Mining companies that value the training and recruitment of local labor, use local suppliers, and drive strong economic clusters will win support from communities where they operate. Without the opposition of the public, some governments may take back the tough stance on mining in recent years.
In order to continue to drive productivity growth, mining companies may have to face a controversial topic: labor reform. 40% to 50% of mining costs are related to labor, and labor is critical to cost and productivity. To increase productivity, mining companies may require labor to produce more ore per hour and may also promote mechanized mining. However, due to the general decline in grades, handling more rocks does not necessarily increase production, and mechanization may have a negative impact on employment. This can lead to conflicts between management and labor, and may lead to union strikes. Coupled with the recent layoffs in mining, the situation is becoming more severe. Significant reductions in job opportunities will not only lead to the loss of experienced employees, increased security risks, but also serious social problems.
There is no doubt that labor conflicts do more harm than good, and changing labor relations is a top priority. Mining companies must clearly measure and present the full impact of their social spending, from paying wages, providing training, to building schools, promoting labor mobility, and creating jobs through procurement expenditures. The government also needs to play a role in ensuring that labor laws fully reflect the changing social and business realities.
Mining companies can help laid-off employees gain new training opportunities while cutting jobs. The remaining employees should be able to increase productivity and get higher pay. Although the renegotiation of the contract is a bitter medicine, it can keep the job. Otherwise, once the mining company is forced to close, these positions will no longer exist. Mining companies have a responsibility to engage in dialogue with unions and the government to find more effective win-win solutions.
9. Failure to establish positive interaction with the media
The role of the media cannot be viewed correctly, the media is not treated properly, and a benign and effective interaction cannot be formed.
Precautions
In the process of overseas mergers and acquisitions of Chinese mining companies, excessive publicity and rendering may bring uncertainty to the M&A process and cause resistance from local communities or enterprises. The process of mining mergers and acquisitions is often a process of interest hedging. Any unintended behavior may cause resentment and questioning from the other side. It can be seen that overseas mergers and acquisitions, the peace of mind, the positive attitude, the low-key, pragmatic actions can win.
At the macro level, Chinese mining companies go out to invest in the exploration and development of overseas mineral resources, and participate in the distribution of global mineral resources wealth. One-sided emphasis on holding and possessing resources will bring many unnecessary problems. It is clear that Chinese enterprises have invested in local countries, created employment, contributed to local economic and community development, but have no understanding and support from local governments and residents. Therefore, in the process of going out of the resource industry, we should pay attention to propaganda and communication, emphasizing cooperation with local governments, enterprises and communities on the basis of equality and mutual benefit, low-key, pragmatic, and win-win cooperation.
10. Foreign currency and taxation
Relevant regulations
Some countries have unclear taxes; exports are not exactly the same as foreign exchange and terminal sales markets. Some enterprises have insufficient research on trade policies and habits in their countries, whether they are regulated or free of foreign exchange, and whether the exchange rate is value-added or depreciation is unclear.
Precautions
At present, the mining taxes and fees collected by various countries mainly include income tax, property tax, royalties, mining rights (referring to exploration rights and mining rights), environmental subsidies, and resource windfall taxes. When investing in overseas mining, it is necessary to clarify and negotiate tax issues.
To hire professional and practical institutions or talents, you can hire a part-time staff. It is necessary to pay attention to the foreign exchange policy of China and the countries involved, and determine the settlement subject, location and type of goods according to the foreign exchange control policy and changes in foreign exchange value.
Revelation:
Thinking and culture around overseas mergers and acquisitions
The difference between thinking and culture in international mergers and acquisitions is objective. Every civilization and every country has its own unique thinking and culture. It is the sum of the spiritual qualities of emotions, habits, personalities and beliefs formed by a nation in the long-term historical development process under the influence of common economic life. Chinese culture pays attention to human relationships and pays attention to interpersonal relationships, with particular emphasis on communication between enterprises, between enterprises and governments, between enterprises and news media, especially between enterprises and customers. The Western culture is about the rule of law, and everything goes according to the laws and rules. In the process of international mining mergers and acquisitions, both parties from different cultural backgrounds adhere to the working methods, ways of thinking and ways of doing things they are accustomed to.
Because the business decision-makers, managers and employees of the two parties lack sufficient understanding of the social and cultural environment of the other party, they often start from their own inherent thinking and express their opinions and intentions in a way that the other party cannot accept, or from the other party. Information is miscalculated and judged, which may lead to misunderstandings and conflicts. This very different way of thinking deserves our attention and deep thought, and it is necessary to conduct a cultural baptism for ourselves.
Put thinking and culture first
In international mining mergers and acquisitions, most companies will pay attention to legal issues, resource issues, political issues, team issues, financing issues, etc., but they are not aware of these issues are determined by thinking and culture. In the international mining mergers and acquisitions, if we can only see the immediate problems, see the move, it is difficult to have great success. Only by putting cultural issues in the first place and seriously studying them is the fundamental strategy for the bottom line.
Pay attention to due diligence before mergers and acquisitions
Entrust professional institutions to do due diligence before international mining mergers and acquisitions, and explore the political, legal, market, resource, cultural and other issues in mergers and acquisitions, find the thinking and cultural roots behind them, and finally eliminate thinking and cultural aspects. Obstacles. Due diligence in international mining mergers and acquisitions should address the following issues: initial mastery of legal and political risks in the location of mergers and acquisitions, familiarity with cultural traditions and folk customs of mergers and acquisitions; comprehensive understanding of the actual operating conditions of mergers and acquisitions, legal compliance with mergers and acquisitions In-depth understanding of the situation, mastery of the ethics and style of the shareholders and executives of the M&A; prediction of the resistance of the M&A employees to M&A and the possible reaction, and the interests of competitors, industry associations, environmental protection and labor organizations Understanding of the reactions of related parties, etc. For Chinese companies, it is unrealistic to rely solely on their own strength to make comprehensive and in-depth judgments on various realities or potential risks. Therefore, conducting due diligence by entrusting professional organizations is one of the important ways to regulate the risks in international mining mergers and acquisitions.
Implement localized management
The essence of localized management in international mergers and acquisitions is the process in which enterprises fully integrate management, production, management, trade and other aspects into the social environment where the purchaser is located. Implementing localized management is conducive to reducing the high cost of dispatching employees and transnational operations overseas. It can promote better integration of enterprises with local labor, residents and government, reduce the resistance of local society to foreign companies, and help enterprises globally. Rationally allocate its limited resources and maintain a sustainable competitive advantage. For international mining mergers and acquisitions, these advantages are generally applicable to international mergers and acquisitions. The key to implementing localized management in the international mining M&A process is to adjust the company's development and management philosophy according to the unique social and cultural background, political, economic and rule of law environment of the host country, and continuously promote cultural harmony and common development. In short, the adaptation of culture and thinking is two-way and interactive. The mutual trust and understanding between China and foreign countries and the pursuit of common values ​​are very important in international mining mergers and acquisitions.
Guided by mutual benefit and win-win
Every international merger is a process of redistribution of interests between enterprises and even between countries. M&A that only seeks to satisfy itself and does not benefit the other party cannot proceed. In the process of international mining mergers and acquisitions, if you ignore the requirements and interests of the other party and consider the interests of each other, and lack the belief of mutual benefit and win-win, then the M&A behavior will be difficult to succeed. Therefore, only by transforming thinking and treating international mergers and acquisitions with a win-win attitude can we laugh at the end.
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