Chinese overseas M&A activities cool in H1: report

BEIJING - Chinese overseas mergers and acquisitions (M&A) activities lost steam in the first half of this year amid rising global economic uncertainties, a report showed Thursday.

Chinese firms spent about $22 billion in outbound M&A deals in the first six months of the year, down by about 60 percent from the same period in 2017, according to a report by global management consultancy Bain & Company.

Bain attributed the drop to China's currency depreciation, fears of the effects of the US-China trade dispute, and tightening regulations.

Chinese outbound M&A represented more than 40 percent of deals in Asia-Pacific from 2015-2017, but saw shares drop markedly in H1 in 2018, the report showed.

There are still ample opportunities for more overseas acquisitions, the report pointed out. In 2017, China spent only 0.6 percent of its GDP on outbound M&A, while Japan's spending on outbound M&A is usually double China's ratio.

Bain observed that the number of acquisitions made by private enterprises is growing much faster than that by state-owned enterprises. The company expected an increase in deals aimed at consolidating growth at home while accessing broader markets abroad.

This latest stage of M&A is helping Chinese companies gain market share in utilities, construction and Internet-based businesses in countries such as Brazil, India and Indonesia, though Europe and North America remain the largest capital destinations, according to Phil Leung, who leads Bain & Company's Asia-Pacific Mergers & Acquisitions practice.

"Chinese companies looking to acquire beyond China's borders focus on winning at home and exporting abroad, which enables them to strengthen their domestic competitive stance while simultaneously positioning for global expansion, especially in other developing markets," Leung said.