(ECNS) -- Chinese companies are increasingly eyeing developed countries and top industries in their overseas acquisitions in deals that are likely to set a new record this year, Economic Information Daily reports.
Overseas mergers and acquisitions (M&As) by Chinese companies valued at more than $1 billion each were on the rise in the first five months of 2016, with deals in Europe and the United States overtaking Africa as the main targets, the paper said.
The latest data from Zero2IPO Research also showed that Chinese M&As so far this year concentrated on biotechnology, medical care, environmental protection and advanced manufacturing companies in developed countries including the U.S., Europe and Australia, a significant shift from the previous focus on energy and mining.
Several overseas moves were high-profile acquisitions, including a $40-billion deal for Switzerland's Syngenta by China National Chemical Corp. (ChemChina) and Haier Group's $5.5-billion takeover of General Electric's home appliance business, according to Zero2IPO Research.
Gu Hong, co-head of M&As at JP Morgan Asia Pacific, said ChemChina's acquisition indicated that China was catching up with world leaders in the complexity and scale of its M&As.
Data from JP Morgan showed that the number of Chinese overseas M&As so far this year saw a more than fivefold increase over the same period in 2015.
"As a result we believe China's overseas M&As may set a new historic high in 2016," Gu said.
He predicted more large-scale M&As in the second half of the year, which "will increase market confidence in Chinese enterprises."
Qian Hao, an analyst at Zero2IPO Research, said large M&As can involve strategic resources or large companies, which have higher political and policy risks. Complicated review procedures also bring uncertainties to such deals, making them costly even if the bid is unsuccessful, he noted.
"With China's economic downturn, low-end manufacturing is shifting to Africa and Southeast Asia due to their lower costs while Chinese companies are facing increasingly fierce international competition," Qian said.
"Driven by the need for a global strategy, Chinese companies want to accumulate technological and brand advantages at a faster pace through M&As in order to grow stronger. Besides, M&As in high and new industries usually involve a large investment."
