China's International deals shrank in 2017 - Rupert Hoogewerf

Rupert Hoogewerf

Overseas mergers and acquisitions by Chinese companies went down in value over 2017, says a report by Hurun. Especially the real estate and energy industries went down, says Hurun chief researcher Rupert Hoogewerf to Global Times. Retail, technology and manufacturing did relatively well.

Global Times:

In 2017, M&A deals by Chinese companies fell 1.7 percent year-on-year to 400, said the report. 

Among these deals, 312 disclosed the amount of investment, which was 960 billion yuan ($152.11 billion), down 28 percent year-on-year. The value of the top 100 M&A deals slumped 37 percent to 880 billion yuan. 

The manufacturing industry had the largest number of M&A deals in 2017, followed by technology, retail, energy, mineral, public services, medical, financial services and property, the report noted. 

Compared with 2016, the energy and real estate sectors had the biggest declines in transaction numbers, while manufacturing, technology and retail had the largest gains, Rupert Hoogewerf, chairman and chief researcher of the Hurun Report, was quoted as saying in the report. 

The largest deal involved a consortium led by property developer Vanke, Bank of China Group Investment and venture capital firms Hopu Investment and Hillhouse Capital Group, which acquired 78 percent of Singapore-based logistics company GLP Group for 104 billion yuan. 

The US was still the hottest destination for Chinese investors in 2017, with 16 investments. But the number of M&A deals fell 14 compared with 2016, according to the report. The report said that the Belt and Road initiative has offered new opportunities for Chinese companies. In 2017, the transaction volume of M&A deals in countries and regions along the Belt and Road routes surged 25 percent year-on-year to 240 billion yuan. By 2030, investment is estimated to reach 30 trillion yuan.

More in the Global Times

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Haier's boss surprises his acquired US management - Bill Fischer

Bill Fischer

When Haier took over GE's Appliances, US management feared the future. But the Chinese takeover is very different from the American style, they discovered. Western firms are victim of their traditional viewpoints, tells IMD-professor Bill Fischer, who studied Haier's very different corporate style, to AP.

AP:

Haier has tried to speed up product development by using the internet to ask potential customers for suggestions and feedback, an approach taken by Chinese smartphone brands. The company says a new appliance can go from drawing board to market in as little as one year, down from more than three years. 

CEO's Zhang Ruimin’s management changes “are more impressive than we see anywhere,” said William A. Fischer, a professor at the IMD business school in Switzerland who has followed the company for a decade. He co-wrote the 2013 book “Reinventing Giants: How Chinese Global Competitor Haier Has Changed the Way Big Companies Transform.” 

“He trusts his employees to play more of a leadership role,” Fischer said. 

He said a group of European executives he took to Haier headquarters two years ago refused to believe its decentralized style could work. 

“I was struck by how daring Haier was in their thinking. And the people I was working with were hostages to very traditional ways of working,” said Fischer.

More at AP.

Bill Fischer is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

Are you looking for more experts on China's outbound investments at the China Speakers Bureau? Do check out this list.
 

Outbound M&A will slow early 2017 - Shaun Rein

Shaun Rein

Increased government restrictions on the outflow of capital will severely impend the outbound M&A activities in the first quarter of 2017, after a record year in 2016, expects business analyst Shaun Rein, according to the South China Morning Post.

The South China Morning Post:

China overtook the US for outbound mergers and acquisition (M&A) volume for the first time, with US$219.3 billion of deals announced in 2016, according to data compiled by Dealogic. 

The record-high deal volume came as overseas takeover activity climbed for a seventh consecutive year, according to a full review of 2016 released by Dealogic on Tuesday.

It put China slightly ahead of the US on US$217.69 billion, down from $237.99 billion in 2015, although Dealogic said the figures are based on preliminary annual data. 

A total of 745 cross-border deals by China were announced in 2016, accounting for more than half of Asia Pacific’s outbound volume, which hit a record US$445.1 billion, according to the report. 

But some analysts believe it might mark a near-term plateau, as the Chinese authorities strengthen their scrutiny of outbound M&A activity and tighten checks on capital outflows in a bid to curb yuan depreciation and a draining of foreign reserves pool. 

Shaun Rein, managing director of China Market Research Group, said: “Outbound M&A activity will slow sharply over the first quarter of 2017, as the Chinese government is making it very difficult to get approval to convert currency, even for legitimate business transactions, because they are very concerned about capital outflow pressure.” 

In an attempt to counter the yuan’s steep devaluation, the Chinese central bank has introduced stricter rules on overseas payments and lending, and guided commercial banks to scrutinise reasons for large overseas payments.

More in the South China Morning Post.

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Why Chinese companies go after American brands - Shaun Rein

Shaun Rein

Lexmark was the latest American company, finding itself in Chinese hands. Chinese companies use acquisition to embark on their global journey, and they have a special appetite for American brands, tells business analyst Shaun Rein in Marketplace.

Marketplace:

Is it the slowing Chinese economy, a weakened yuan? Probably both, but whatever the cause, Chinese companies have been very active in acquiring American ones. 

The American printer company Lexmark is being sold to the Chinese group Apex for about $3.6 billion. 

Shaun Rein, founder of China Market Research Group, said this trend will likely carry on for years. "Already in Q1 of this year, there’s been more outbound Chinese investment than all of 2015," he said. "So we’re just at the beginning of Chinese companies becoming global players through acquisition.” 

An interesting wrinkle in this story is that the printer market in China is still booming. Unlike in the U.S. where Americans use electronic signatures and PDFs, all contracts and invoices still have to be printed out. So Apex, the company acquiring Lexmark, could be buying more than the Lexmark name.

More at Marketplace.

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´request form.

Are you looking for more experts on China´s outbound investments? Do check this list here.  

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