Overseas M&As mark shift to ‘rational investment’

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Chinese yuan. Photo: iStock

Chinese enterprises have undergone profound changes in their overseas mergers and acquisitions over the past decade, said Wei Lidong, head of the China Merger and Acquisitions Association, Yicai.com reported.

On the one hand, Chinese companies’ buying resources, technologies, networks and brands have gradually shifted from demand-driven industries to the need for global asset allocation. 

On the other hand, Chinese enterprises are gradually changing from blind expansion and non-rational acquisition to industry consolidation that focuses more on strategic synergy and cultural integration.

A report published by PwC shows that overseas M&As involving Chinese companies have cooled over the first three quarters and returned to rational growth.

A total US$97.7 billion in 572 M&As were recorded in this time period, according to the report. Both the number and the amount of deals have also dropped 14.8% and 38.9% from a year earlier.

Meanwhile, Ernst & Young reported that in 2016, the amount of overseas M&As by Chinese companies surpassed that of the US. Ernst & Young estimates that China’s outward FDI flows will overtake the US in 10 years.

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