News / Asia

Chinese Companies Chasing Foreign Assets

Li Shufu, right, chairman of Chinese automaker Geely, speaks while a photo of a Volvo car is projected on a screen during a press conference in Beijing, 30 Mar 2010
Li Shufu, right, chairman of Chinese automaker Geely, speaks while a photo of a Volvo car is projected on a screen during a press conference in Beijing, 30 Mar 2010
Heda Bayron

A new survey of Chinese companies says many are planning to acquire overseas assets in the next three years. Cash-flush Chinese companies are looking for new markets and know-how for their businesses.

China's biggest state-owned bank, the Industrial and Commercial Bank of China, recently announced it has acquired a U.S. securities brokerage for one dollar. The sale of Prime Dealer Services, a small unit of Fortis Securities, required ICBC to take over the company's debts. ICBC says it is also looking to acquire assets in Southeast Asia.

Last month, the state-owned China National Offshore Oil Corporation bought a one-third stake in a Texas natural gas field.

These are just few of an increasing number of Chinese acquisitions worldwide. Last year, Chinese companies invested about $43 billion in overseas mergers and acquisitions.

Jeremy Fearnley, head of mergers and acquisitions at the consulting firm KPMG in Hong Kong, says Chinese companies - both state-owned and private businesses - are seeking acquisitions overseas.

KPMG surveyed more than 150 executives of Chinese companies on their plans for overseas investments in the next three years.

"Eighty-five percent of the people we interviewed are looking to do M&As," said Fearnley.  "Everyone has it on their agenda really."

Most of the companies surveyed with less than $150 million in revenue say they are looking to invest in Asia, while about half of respondents with larger revenue are planning to snap up assets in North America and Europe, as well as Asia.

"Where we see people looking more to the U.S. and Europe are really to acquire IT, brands, and technology - assets that they can then [use to] take their business to the next level," added Fearnley.  "Now that might be to export more in those overseas markets. Alternatively, it can be to sell more of those products using a better known international brand or using high technology to give it an advantage in their local market or into China."

For example, Chinese carmaker Geely completed its acquisition of Ford Motors' stake in the Swedish carmaker, Volvo, in August. Volvo plans to open new factories in China and sell Chinese-made cars in Europe.

Chinese companies have invested widely in Africa and Latin America too, mainly in mining and oil and gas, as part of the country's strategy to ensure a supply of raw materials for its fast-growing economy.

However, in the past, Chinese investments in strategic U.S. industries such as energy have failed due to security concerns. In 2005, CNOOC, the same company that bought into the Texas gas field, failed to take over Unocal. Anshan Iron and Steel's joint venture with Steel Development Co. to build a reinforced bar factory in Mississippi faced opposition from some U.S. lawmakers.

The KPMG survey says Chinese companies' relative inexperience in deal-making, cultural differences and decision-making processes sometimes hamstring their abilities to close deals. The majority want to have Chinese control of their target companies, although others are more pragmatic when faced with ownership restrictions.

Chen Jian, China's vice minister for commerce, this week urged the U.S. to open up to more Chinese investments. The ministry said Chinese investments in the U.S. for the first nine months of the year rose 530 percent from last year.

You May Like

UN Ambassador Power Highlights Plight of Women Prisoners

She launches the 'Free the 20' campaign, aimed at profiling women being deprived of their freedom around the world More

Satellite Launch Sparks Spectacular Light Show

A slight delay in a satellite launch lit up the Florida sky early this morning More

Fleeing IS Killings in Syria, Family Reaches Bavaria

Exhausted, scared and under-nourished, Khalil and Maha's tale mirrors those of thousands of refugees from war-torn countries who have left their homes in the hopes of finding a better life More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Nobel Prize Winner Malala Talks to VOAi
X
August 31, 2015 2:17 AM
Nobel Peace Prize winner Malala Yousafzai met with VOA's Deewa service in Washington Sunday to talk about women’s rights and unveil a trailer for her new documentary. VOA's Katherine Gypson has more.
Video

Video Nobel Prize Winner Malala Talks to VOA

Nobel Peace Prize winner Malala Yousafzai met with VOA's Deewa service in Washington Sunday to talk about women’s rights and unveil a trailer for her new documentary. VOA's Katherine Gypson has more.
Video

Video War, Drought Threaten Iraq's Marshlands

Iraq's southern wetlands are in crisis. These areas are the spawning ground for Gulf fisheries, a resting place for migrating wildfowl, and source of livelihood for fishermen and herders. Faith Lapidus has more.
Video

Video Colombians Flee Venezuela as Border Crisis Escalates

Hundreds of Colombians have fled Venezuela since last week, amid an escalating border crisis between the two countries. Last week, Venezuelan President Nicolas Maduro ordered the closure of a key border crossing after smugglers injured three Venezuelan soldiers and a civilian. The president also ordered the deportation of Colombians who are in Venezuela illegally. Zlatica Hoke reports.
Video

Video Rebuilding New Orleans' Music Scene

Ten years after Hurricane Katrina inundated New Orleans, threatening to wash away its vibrant musical heritage along with its neighborhoods, the beat goes on. As Bronwyn Benito and Faith Lapidus report, a Musicians' Village is preserving the city's unique sound.
Video

Video In Russia, Auto Industry in Tailspin

Industry insiders say country relies too heavily on imports as inflation cuts too many consumers out of the market. Daniel Schearf has more from Moscow.
Video

Video Scientist Calls Use of Fetal Tissue in Medical Research Essential

An anti-abortion group responsible for secret recordings of workers at a women's health care organization claims the workers shown are offering baby parts for sale, a charge the organization strongly denies. While the selling of fetal tissue is against the law in the United States, abortion and the use of donated fetal tissue for medical research are both legal. VOA’s Julie Taboh reports.
Video

Video Next to Iran, Climate at Forefront of Obama Agenda

President Barack Obama this week announced new initiatives aimed at making it easier for Americans to access renewable energy sources such as solar and wind. Obama is not slowing down when it comes to pushing through climate change measures, an issue he says is the greatest threat to the country’s national security. VOA correspondent Aru Pande has more from the White House.
Video

Video Arctic Draws International Competition for Oil

A new geopolitical “Great Game” is underway in earth’s northernmost region, the Arctic, where Russia has claimed a large area for resource development and President Barack Obama recently approved Shell Oil Company’s test-drilling project in an area under U.S. control. Greg Flakus reports.
Video

Video Philippine Maritime Police: Chinese Fishermen a Threat to Country’s Security

China and the Philippines both claim maritime rights in the South China Sea.  That includes the right to fish in those waters. Jason Strother reports on how the Philippines is catching Chinese nationals it says are illegal poachers. He has the story from Palawan province.
Video

Video China's Spratly Island Building Said to Light Up the Night 'Like A City'

Southeast Asian countries claim China has illegally seized territory in the Spratly islands. It is especially a concern for a Philippine mayor who says Beijing is occupying parts of his municipality. Jason Strother reports from the capital of Palawan province, Puerto Princesa.
Video

Video Ages-old Ice Reveals Secrets of Climate Change

Ice caps don't just exist at the world's poles. There are also tropical ice caps, and the largest sits atop the Peruvian Andes - but it is melting, quickly, and may be gone within the next 20 years. George Putic reports scientists are now rushing to take samples to get at the valuable information about climate change locked in the ice.

VOA Blogs