China, Technology and the Global Market
All eyes are on China. At least, all eyes are on Chinese companies investing abroad.
The world’s fastest growing economy since the turn of the century has often been a focal point as spectators have scrambled to track and understand China’s meteoric rise to becoming a global economic powerhouse. However, as China’s own internal acceleration tailed off in the past few years, Chinese companies have become much more aggressive in pursuing international investments. There are no signs this will slow as, in under just six months, 2016 has already outgrown a record-breaking 2015 for Chinese outbound mergers and acquisitions (M&A).
There are a number of reasons why this is happening: concerns about China’s weakening economic growth and the wish to gain access to new markets and technology to satisfy a growing middle class constitute valid reasons for China’s outward view.
The country’s transition to a consumption-driven and service-oriented economy is also hastening the desire for overseas acquisitions. As such, high-technology from mature U.S. and European markets which power many of the products Chinese consumers have grown to depend on, including smartphones and automobiles, have received significant attention from ambitious Chinese companies wishing to fulfil the desires of a middle class growing in influence.
The desire is palpable, the funds are available, the Chinese government is supportive — but as the past year has shown, all the material hallmarks of a successful transaction do not always add up to a completed transaction. China’s reputation continues to prove troubling for officials in the U.S. and, increasingly, in Europe. China’s ultimate objectives with the acquisitions, the reliability of their management teams and the origin of their capital have all come under increasing scrutiny.
Senior Managing Director