Only companies that integrate resources on a global scale will be winners in the future, particularly in manufacturing, said Zhan Chunxin, chairman of Changsha Zoomlion Heavy Industry Science & Technology Development Co, at an economic forum organized by China Central Television.
"The advantages of technique and talent in advanced Western countries are declining, but the advantage of cheap labor in developing countries such as China is fading at the same time," he said.
"A good choice to enter the global market is international mergers and acquisitions (M&As)."
The State-owned company is one of China's leading heavy equipment manufacturers. Its 2008 purchase of Italy's CIFA Co - then the world's third largest maker of concrete machinery - made Zoomlion the largest in the sector globally.
Zhan said the biggest achievement in the acquisition was "winning the hearts" of CIFA's employees as together they weathered the economic crisis.
"So today we have an important base in Europe, a Zoomlion team from the bottom of its heart, which is the most valuable," he said.
But Zhan added choosing the right partners is all-important.
In its CIFA deal, Zoomlion had a number of investment company partners including Hony Capital and Goldman Sachs with rich experience in M&A deals.
While Zhan called it "a perfect acquisition", another State-owned M&A was not so successful.
Chinese consumer electronics maker TCL Corp purchased French TV maker Thomson in 2004, but suffered losses for the next two years. TCL's Chairman and President Li Dongsheng said his company learned two lessons from the experience.
"The first is, don't be overconfident," he said. "M&As are high risk and there can be many difficulties you can't predict. So you have to get your human resources, management capability and capital ready."
"The second is the right market anticipation," he added. TCL believed rear projection display TVs had great potential, so it purchased Thomson and its core technologies. But LCD technology, not rear projection, later became the standard.
In the first nine months of last year, Zoomlion generated 33.2 billion yuan ($5.3 billion) in revenues, up 39 percent from the same period in 2010, and profits of nearly 6 billion yuan, up more than 90 percent.
Over the same period, TCL's revenue totaled 43.9 billion yuan, up 21 percent, with 1.4 billion yuan in profits, a stunning 50-fold year-on-year increase.
The latest report from TCL released on Jan 4 noted that the company's annual profit in 2011 was around 1.8 billion yuan, an increase of 280 percent over the previous year.