Deloitte has found that up to 70 percent of the worldwide completed M&A deals in all industries prove to be unsuccessful.

For mining M&As, Chao said Chinese companies should clarify their targets and learn how to choose. "You should make it clear why and for what use you buy it or invest in it.

"For small and medium companies, mineral resources development is an extremely high risk business as it's capital intensive."

Several large state-owned companies have made progress in overseas mining acquisitions this year.

In the most recent deal, the state-owned iron ore trader Sinosteel Corp won approval late last month from Midwest Corp's board to buy out the Aussie ore prospector after sweetening its offer. During the course, Sinosteel successfully turned a hostile offer to a friendly one, and Midwest's directors have recommended shareholders accept Sinosteel's revised offer.

The new offer values Midwest at A$1.36 billion (US$1.31 billion) that could lead to the largest overseas takeover in the metals industry by a Chinese company. The takeover has won the approval of Australia's Foreign Investment Review Board.

But purchases have become more difficult.

An Australian newspaper reported last month that at least 10 Chinese companies have withdrawn foreign investment applications to buy into Australian resource companies after pressure from the Australian government.

A Sinosteel official in Beijing also said to his knowledge several other Chinese companies' applications to buy into Australia's resources sectors have been deadlocked since early this year.

"Some were asked to resubmit applications especially after Sinosteel made some progress in its Midwest bid. Then they have to wait for a longer time," said the official who declined to be named because he is not authorized to speak to media. "I think Australia is tightening."

Although Australia's resources minister Martin Ferguson has reportedly said no Chinese firms had been told to withdraw applications in mining purchases, he stressed "as China makes investments, some will be rejected, some will be changed to meet our national interest test."

Deloitte's Chao said developed nations typically have their own systems to avoid foreign capital which would hurt national interests and that's the same case for China. "One should always make it clear what is the goal. To reach that goal, it is not necessary that you must buy something."

(Shanghai Daily May 22, 2008)