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Chinese companies have speeded up their efforts to acquire overseas competitors as they are striving to secure raw material resources and build strongholds overseas.
Overseas merger and acquisition activity by Chinese companies this year was expected to far surpass 2003, British research firm Dealogic said Sunday.
According to statistics published by Dealogic, Chinese companies have clinched 43 overseas merger and acquisition deals by mid-October, compared with 39 last year. The total value of the deals has reached US$1.93 billion, only US$270 million less than the whole year of 2003.
Although most of the overseas companies had abundant raw material resources or strong technologies and brands, they were currently lagging behind large global competitors and welcomed takeover by the Chinese firms, analysts said.
Canadian miner Falconbridge Ltd., for example, has said it will benefit from a takeover of parent Noranda Inc. by China Minmetals.
“From a strategic perspective, (Minmetals is) very supportive of the strategy we have, which is to continue to grow our production of both copper and nickel,” said Aaron Regent, CEO of Falconbridge.
“Falconbridge will be better positioned than most companies to benefit,” Regent said, adding China would remain a major consumer of metal over the next two decades.
A deal with the Chinese company could be announced in a couple of weeks, he said.
China’s top steel maker, Baoshan Iron and Steel Co. (Baosteel), is also expected to buy assets overseas to secure its raw materials.
In the consumer electronics industry, TCL International Holdings, one of China’s largest television and handset makers, formed joint ventures earlier this year with France’s television manufacturer Thomson SA and telecommunications giant Alcatel.
The joint ventures have helped TCL carve a large share in the European market by gaining the RCA and Thomson TV brands, the Alcatel cell phone brand as well as manufacturing operations.
Earlier this month, Zhang Ruimin, CEO of China’s top consumer appliances maker Qingdao Haier Group, also expressed his wish to enter the Japanese market through merger or acquisition although declining to unveil any timetable.
Shenzhen-based 999 Group, one of the country’s largest pharmaceutical enterprises, bought a 51 percent stake in Japan’s East Asia Pharmacy last year and is seeking to acquire another Japanese drug-making business.
(Shenzhen Daily October 27, 2004)
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