China - rising market for transnational M&A

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Last updated at: (Beijing Time) Tuesday, November 11, 2003

China - rising market for transnational M&A

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A senior government official said Tuesday that China has become a rising market for international merger and acquisition, and the transition could be witnessed in every field of the country's financial market.

Li Rongrong, minister in charge of the State-owned Assets Supervision and Administration Commission of the State Council (SASAC), made the remarks at a press conference here Tuesday.

Li said that one of the most important characteristics of current economic globalization was the soaring of transnational merger and acquisition, noting that more than 80 percent of international direct investment all over the world comes through merger and acquisition.

Transitional merger and acquisition, especially those involving large-scale multinationals, huge investments and significant restructuring become the most distinct characteristic of economic globalization, Li added.

Li pointed out that China has been regarded as one of the hottest spots for international investment, but foreign investmentin China introduced by means of enterprise purchases constitutes only five percent of the total.

The transnational purchase will become one of the most important methods to attract foreign investment, Li predicted.

Cooperation between Chinese and transnational companies has seen greater intensification, developing from simple acceptance of production investment to establishment of Chinese headquarters, research and development centers as well as supporting purchasing organizations, Li said.

He revealed that SASAC already approved 48 enterprises to transfer property rights or assets from this April to September, involving a total of 22.5 billion yuan (2.56 billion US dollars) in state-owned capitals and equities.

Li said Chinese local governments were assigned more autonomy for assets disposition, and merger and acquisition trends among local SOEs became rather predictable under the newly established management system of state-owned assets.

As a result, it is quite reasonable to believe that China will soon be embracing a merger and acquisition climax, while all the participants, from investors to agencies, are sure to find enormous opportunities, Li noted.

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