A Brave New World: The Climate For Chinese M&A Abroad

The EIU’s report finds that Chinese companies are planning to take a more cautious approach to foreign acquisitions, avoiding outright buyouts and seeking more partnerships and alliances.

 
China’s buying spree has raised a number of concerns, particularly where it has involved state-owned enterprises (SOEs). Chinese companies are discovering just how difficult it can be to get mergers and acquisitions (M&A) right, especially when they are crossborder deals—and so companies have lowered their ambitions.
 
Inside the report:
  • In-depth interviews with large Chinese companies with experience—both successful and failed—of investment abroad
  • Online survey of 110 Chinese executives
  • Interviews with several foreign participants and advisers in Chinese deals overseas
  • Analysis of available data on Chinese companies’ crossborder transactions over the past five years (focusing on deals worth more than US$50m)
 
Key Findings:
  • Chinese acquirers feel unprepared for cross-border acquisitions, and as a result, they are lowering their ambitions
  • Outbound M&A remains dominated by state owned enterprises (SOEs)
  • As economic conditions recover and competition for deals heats up, Chinese purchasers could be at a disadvantage
  • Lack of communication is a major obstacle to successful deals
  • Demands for reciprocity will grow
 
 
 

 

 

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