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Kuka shares jump on the news. This is wonderful.
Wade Shepard ,
CONTRIBUTOR
I travel to emerging markets around Asia and report on what I find.
Opinions expressed by Forbes Contributors are their own.
“The Chinese aren’t coming, they’re already here.”
I’ve been told this repeatedly as I’ve traveled across Eurasia looking into Chinese investments along the New Silk Road. But it’s not just trans-continental highways and rail lines, industrialand special economic zones, and new cities that China is interested in pumping money into abroad, but foreign companies as well. China’s outbound merger and acquisition (M&A) investment in the West has been growing at a record pace, as more and more major American and European companies are strategically being bought up by Chinese enterprises.
According to a recent report by the Mergermarket Group, by the end of August China had already surpassed its yearly record for outbound M&A investment. With 173 deals worth $128.7 billion in the books, China is so far the top acquirer of foreign companies in 2016 — a position which, if held until the end of year, could unseat the USA for the first time since 2006.
“China has seen continuous annual growth in both outbound deal size and deal volume in the recent ten years,” said Yiqing Wang, Mergermarket’s China editor. “However, 2015 and 2016 have witnessed [an] even more aggressive growth spree.”
Chairman of Swiss farm chemicals giant Syngenta, Michel Demare (R) shakes hand with Chairman of ChemChina Ren Jianxin during a press conference to present Syngenta’s annual results at the company’s headquarters in Basel on February 3, 2016. State-owned China National Chemical Corp on February 3, 2016 offered $43 billion in an agreed takeover for Swiss pesticide and seed giant Syngenta, in what would be by far the biggest-ever overseas acquisition by a Chinese firm. (MICHAEL BUHOLZER/AFP/Getty Images)
The types of foreign firms that Chinese companies are most interested in acquiring have moved beyond the usual resource and energy sectors and into the technology, industrial, chemical, and consumer spaces, which closely mirrors the broader economic transition that is currently underway in China — which is focused on moving away from export-driven manufacturingtowards high-end, high-tech R&D and domestic consumption.
In addition to being numerous, many of China’s takeovers of Western companies this year have also been huge. ChemChinaacquired the Swiss pesticide and seed producer Syngenta AG for $43 billion — the largest overseas acquisition by a Chinese company to date. Tencent took over Supercell, the Finnish mobile game developer, for $8.6 billion. Zhongwang Internationalbought out US aluminum producer Aleris for US$2.3 billion.HNA Group purchased Ingram Micro Inc for $6.3 billion. Haier Group paid $5.4 billion for General Electric’s home appliance division. While even the Chicago Stock Exchange hasn’t remained off the radar of Chinese investors.
Europe has been the prime focus of Chinese M&A investment this year, with $76.5 billion going towards the acquisition of European firms. Germany is the European country drawing the most interest from Chinese pursuers, as 24 German companies —roughly one per week — have been acquired by Chinese enterprises as of June of this year. For scale, in all of last year there were only 25 such transactions.
But if we think that Chinese companies are bailing on China by buying up foreign companies we’d be mistaken. One of the major drivers behind this phenomenon is actually the exact opposite.
Europe has been the prime focus of Chinese M&A investment this year, with $76.5 billion going towards the acquisition of European firms. Germany is the European country drawing the most interest from Chinese pursuers, as 24 German companies —roughly one per week — have been acquired by Chinese enterprises as of June of this year. For scale, in all of last year there were only 25 such transactions.