On 20th, December, 2009, Shanghai Jin Jiang International Hotels announced the acquisition of Interstate Hotels & Resorts, the largest independent hotel management company in the United States, through a joint venture with the US-based real estate investment firm Thayer Lodging Group.

The overseas expansion represents a significant step for Jin Jiang Hotels, a leading hotel operator and manager in China with a number of well-known brands such as “Jin Jiang” and “Jin Jiang Inn” across the country. Interstate Group, one of the largest hotel management companies in the United States, owns 232 hospitality properties in the US and several other countries. Although it is not as well-known as other high-end hotels like the Westin, Marriott and Hilton, Interstate is highly specialized in hotel management, a skill strongly required by Jin Jiang at this point to contribute to the success of their properties.

However, many analysts have expressed doubts regarding the merger. Firstly, it is said that Jin Jiang doesn’t have a clear brand positioning and branding system currently, and that this situation will not change simply by increasing the number of properties in their portfolio. Furthermore, since Jin Jiang hasn’t firmly established its leading status in the domestic market, many question how it can hope to realize success in foreign markets. To avoid the risk of diluting brand equity, Jin Jiang should first develop a strong brand platform and action plan, including brand engagement activities that build capacity for brand management within the organization. This should then be followed by brand implementation efforts that are aligned with the overall brand strategy and ongoing brand management activities.

Although expansion by acquisition has worked for other Chinese companies in the past, for example Lenovo, branding considerations cannot be ignored when expanding internationally. Let’s hope Jin Jiang Hotels has that figured out already.