Saturday, June 2, 2012

Chinese Entrepreneurs are investing abroad

When I went to live in China back in January 2004, I have the vision that Chinese companies were going to intensively perform outbound investments in the developed world. At the time, it sounded a bit futuristic for many people. It was before Lenovo performed its acquisition at IBM. Since then and particularly in the recent years, we have seen many of such acquisitions in our countries and more and more from provincial SOEs (State Owned Enterprises) and private companies. The poor situation of our countries and the urgent need of our companies to get cash -in particular the EU- has helped this. Last year around 62% of Chinese acquisitions were performed in Europe and of the about 6.4% of them that took place in Latin America, many of them have involved acquisitions of EU companies' assets there. It will take some space to already make a full account of all them. So, I will just give you here the two most recent examples of these Chinese M&As:
  • Chinese power company State Grid Corporation of China (SGCC) has agreed to purchase electricity transmission assets in Brazil from the Spanish group Actividades de Construcción y Servicios (ACS) for USD 531mn, Reuters reported.
  • Chinese automobile dealership group Zhongsheng Group said it acquired a 70% stake in German vehicle-personalization specialist Carlsson Autotechnik.
How do you think these two transactions differ from a Chinese standpoint?.
What are Chinese entrepreneurs looking for in each of these cases?.
What do you think is the main reason behing the German acquisition?

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