Business focus in overseas M&As
By Maggie Zhang |
June 26, 2010, Saturday
|
Print Edition
Print Edition
CHINESE enterprises seeking overseas acquisitions should be business-driven rather than looking to acquire at bargain prices, industry watchers said yesterday.
"Opportunities abound as the global financial crisis caused lots of companies to seek external capital," Chris Lu, chief executive officer of Deloitte China, said yesterday in Shanghai. "But Chinese companies seeking overseas deals should have a cool head and be really cautious on making overseas acquisitions" because "an acquisition deal that costs one dollar may trigger a management cost of a grand."
He advised that companies seeking mergers and acquisitions should look at the post-acquisition management situation, how to increase market share and whether there are any technological benefits as these are more important considerations than seeking deals at bargain prices.
James Chen, a Deloitte partner, said Chinese enterprises enjoy a huge potential in overseas construction, energy and resources, finance and manufacturing.
"The uncertainties of the external markets have presented Chinese companies with opportunities as some of their rivals have been driven out," Chen said. "Overseas expansion is set to grow as Chinese companies become more prominent."
Another more reasonable expansion channel is organic growth such as banks opening branches overseas rather than seeking bargain M&As, he said.
Some Chinese firms have bitter experience in overseas M&As, for example, Ping An Insurance (Group) Co's ill-fated investment in Fortis.
"Opportunities abound as the global financial crisis caused lots of companies to seek external capital," Chris Lu, chief executive officer of Deloitte China, said yesterday in Shanghai. "But Chinese companies seeking overseas deals should have a cool head and be really cautious on making overseas acquisitions" because "an acquisition deal that costs one dollar may trigger a management cost of a grand."
He advised that companies seeking mergers and acquisitions should look at the post-acquisition management situation, how to increase market share and whether there are any technological benefits as these are more important considerations than seeking deals at bargain prices.
James Chen, a Deloitte partner, said Chinese enterprises enjoy a huge potential in overseas construction, energy and resources, finance and manufacturing.
"The uncertainties of the external markets have presented Chinese companies with opportunities as some of their rivals have been driven out," Chen said. "Overseas expansion is set to grow as Chinese companies become more prominent."
Another more reasonable expansion channel is organic growth such as banks opening branches overseas rather than seeking bargain M&As, he said.
Some Chinese firms have bitter experience in overseas M&As, for example, Ping An Insurance (Group) Co's ill-fated investment in Fortis.
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