Exporters focus on overseas M&As
An increasing number of Chinese exporters are seeking to expand overseas through acquisitions to beat the slowdown of global demand, according to corporate executives.
They plan to build the acquired firms into research and development centers, reduce trade barriers and boost falling sales.
“It’s not easy for us to expand business in foreign markets, especially in Europe and America. We will turn the acquired local companies into research centers to acquire cuttingedge technology and push forward product innovation,” said Zhang Huaizhen, generalmanagerassistant at the international department at Shimge Pump Industry Group Co Ltd.
Shimge, a Zhejiangbased listed company, bought two foreign pump firms — Wita Wilhelm Taake GmbH in Germany and Hel-Wita Sp. z o.o. in Poland in September, and has recently been sniffing around for takeover targets in the United States.
Outbound M&A deals that were either completed or in process in the first nine months of 2016 exceeded the volume reported for all of last year, according to data compiled by Moody’s Investors Service Inc, the provider of credit ratings and research.
To address the challenge amid the grim foreign trade situation, AUX Zhang Huaizhen, Import and Export Co Ltd, the Ningbo-based home appliance manufacturer, is also screening potential takeover targets in Latin America in order to reduce the barriers to trade, according to the company’s General Manager Zhang Xuequan.
In addition, the company is planning to set up a factory in Thailand in the next one to two years to consolidate the market in Southeast Asia, Zhang added.
Moody’s report said that Chinese companies might face significant execution and finance risks, as their experience in managing overseas investments is relatively short. That could prevent the deals from generating synergies, and might exert negative influence on the acquirers’ credit quality.
“Chinese companies are not content to be just original equipment manufacturers. We need to upgrade products and establish our own brands globally,” said Zhang from Shimge.
We need to upgrade products and establish our own brands globally.”
an official at Shimge Pump Industry Group Co