Ex­porters fo­cus on over­seas M&As

China Daily (USA) - - BUSINESS - By JING SHUIYU and QIUQUANLIN in Guangzhou

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

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