Tightening control by U.S. regulators will not stop Chinese companies in their pursuit of overseas merger and acquisitions (M&A), analysts said.
Last month, GO Scale Capital, an investment fund led by Chinese GSR Ventures, failed to acquire Philips' Lumileds, the lighting components firm, due to opposition by the Committee on Foreign Investment in the U.S. (CFIUS.)
Sonny Wu, chair of GO Scale Capital, said the deals were nixed due to "unexplained government concerns".
The trend of international industrial division of labor is inevitable, and the company will continue to push for overseas M&A, he said.
GO Scale, which controls LatticePower Jiangxi Corp., a leading LED company in China, hoped the Philips deal would expand its business. Though this particular deal did not go ahead, cooperation with overseas companies will not cease, Wu added, adding that China's LED industry has great potential for cooperation with companies like Philips.
Analysts say regulatory obstructions were related to concerns over technological transfer from the U.S. to China, which would contain the development of China's technological industries, and maintain the advantage of U.S. firms.
Last year, Chinese chip maker Tsinghua Unigroup Ltd. failed to buy Boise, the Idaho-based micron technology firm. Last week, another U.S. company, Fairchild Semiconductor Intl. Inc., rejected an offer to be acquired by a consortium of investors led by CR Microelectronics and Hua Capital Management.
"Challenged by rising Chinese technological power, the U.S. would rather kill all for just one," said Wang Min, CEO of LatticePower.
The U.S. has increased scrutiny of technology deals involving Chinese buyers, said Fan Jishe, a researcher with the Chinese Academy of Social Sciences.
"They have also tightened control over those attempts and deals that may boost China's hi-tech edge or military power," Fan said.
Chinese companies could only circumvent those rules by cooperating with companies in other countries, he added.
In addition, Chinese companies also need to boost their own ability before seeking international cooperation, said Xiao Yuwen, vice mayor of Nanchang City.
"When we become strong enough in the industry, other people will seek cooperation with us," he said.
