Chinese Enterprises March in Overseas M&A
Planned by Doris Li, Kevin Nie, Sara Yan, Zhou Yi and Li Wei, China IP,[Comprehensive Reports]
In 2009, the global investment by multinational corporations declined and the financial crisis still persisted, while the Chinese enterprises accelerated the pace of global operations. Both state-owned enterprises and private sectors tried their best to grasp this opportunity and “brave the wind and waves”.
By the end of 2009, the news of overseas investment and merger by Chinese enterprises kept coming. A PricewaterhouseCoopers report shows that the total volume of overseas investment and M&A by Chinese enterprises may have reached USD 30 to 35 billion in 2009. This figure, which is more than three times higher than that in 2008, sets a new record.
Chinese enterprises have aroused great concern in overseas markets since they “buy the dips” in large scale. The Ministry of Commerce expressed its encouragement and support. However, experts gave different comments and media have divergent views. On one hand, Chinese enterprises are not as strong as their competitors. It is still a question whether they can handle the IP acquisition in M&A, which is a complex and professional issue. Furthermore, are foreign enterprises ready to transfer their core competitiveness to Chinese enterprises? In a few cases of auto purchase, different opinions formed with regard to the right scope obtained by Chinese enterprises, which also show the difficulties and risks.
On the other hand, Chinese enterprises prefer to buy companies with strength in R&D, design and innovation so as to stand on the giant shoulders and move forward. The idea itself is good, but it still depends on the “digestion” abilities of Chinese enterprises. Can they implement this idea as well as imagined?
No matter what outcome the Chinese enterprises achieved in overseas M&A in 2009, a good foundation has been laid for Chinese enterprises to perform on the international stage. These enterprises would certainly become a beacon for future newcomers regardless of “pioneers” or “martyrs”.
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