China's role in overseas mergers and acquisitions, either as purchaser or purchasee has been rising over the years. In the first half of 2010, China ranked 2nd in the two global rankings, following behind the US, Gu Hongdi, general manager of JP Morgan Chase China's merger business, said Tuesday.
Since the beginning of the year, the total trading volume of overseas purchases in which Chinese firms acted as purchasers reached $55 billion, second to the US's $356 billion. The trading volume of deals in which Chinese companies acted as the purchasee reached $74 billion, just behind the US's $316 billion. For a better notion, in 2007 China was not even among the top ten.
China is up on its way to becoming a major purchaser. Since the country was much less affected by the recent crisis, Chinese firms have been able to act more firmly in global purchases.
The country's participations in mergers and acquisitions have not only centered on a single area. Data showed that in 2006, 73 per cent of China's purchases centered in the Asia-Pacific region, while in the first half of 2010, 59 per cent of the volume went to the Asia-Pacific, 14 per cent to Latin America, 14 per cent to Europe, Middle East and Africa, and 13 per cent to North America.
Fang Fang, vice-chairman of Asia investment banking for JP Morgan, said that overseas firms have increasingly shown interest in investing in China due to its stable and prospectful economic growth.
A survey from JP Morgan also showed that a few years ago, most foreign investment companies entered the Chinese market via joint ventures, now they are coming in mass scales.
Currently, Chinese companies are looking for purchases that meet their own strategic necessities as they are now more experienced and mature for business. Be it in effectuating purchases in the overseas market of negotiating with multinationals, Chinese firms have had more initiative at the negotiation table, Gu commented.