Policy adjustments needed to encourage Chinese companies’ overseas M&A

ZHANG Wenkui

State Council Development Research Center

Abstract:

The past several years have seen Chinese companies participating in a growing number of overseas M&A deals for increasing values. Most of China’s state-owned enterprises’ overseas M&A deals are in the resource and mining sectors, while private companies’ deals are usually done to obtain advanced technologies and reputable brands. We can conclude, based on previous experiences, that small and medium-sized companies as well as those engaged in import substitution have a much greater chance for successful integration. Large companies and those with an export-orientated nature have slimmer chances for successful integration. The overseas M&A verification system the Chinese government practices is unfavorable for successful deals and the upgrade of Chinese companies.

Key words: overseas M&A, small and medium-sized companies, integration

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