Chinese automaker Geely promotes a new model in Europe. Many Chinese firms, Geely included, have been making acquisitions overseas. (File photo/Xinhua)
Mergers and acquisitions in Greater China account for one-third of the total for the Asia-Pacific, the region driving much of the world's medium-sized enterprise acquisition market, according to a recent report.
A report released on Monday by Deloitte, a multinational financial consulting service, said that the number of mergers in the Greater China area has reached a new high. Transaction volume grew 25% to reach US$12.7 billion in 2011, the report said.
Deloitte said there were over 2,000 mergers and acquisitions in Asia last year, higher than Europe's 1,960 and North America's 1,834. The region accounted for 32.4% of the world's total mergers involving medium-sized enterprises — firms worth US$5 million to US$500 million — with transaction volume of US$143.2 billion.
Some Chinese funds have also turned to mergers in overseas markets, the survey showed. Most overseas mergers are carried out by Chinese firms in the investment, consumer goods and transportation sectors, said Philip Chen, general manager of Deloitte's financial advisory department.
Mergers carried out in consumer goods sectors outside of China accounted for 25% of the total for medium-sized M&A, and transaction volume and value increased 16% and 20%, respectively. These figures suggest that Chinese businesses have been actively seeking opportunities to merge with clothing, food and beverage and luxury goods firms overseas.
The survey also showed that foreign businesses able to get financing in China are willing to pay more to merge with targeted companies, despite being impacted by the euro crisis. Many, for example, see business opportunities in China's healthcare system, which is set to undergo major reform. They are likely to merge with counterparts in central and western China as the country's 12th five-year development plan — which runs until 2015 — aims to develop the region, reported our sister newspaper Commercial Times.
Firms in biotechnology, IT and telecommunications are also willing to merge with foreign businesses to gain advanced technology and boost productivity, the Commercial Times report said.