Reed Cavendish Wealth Management - Chinese Foreign Acquisitions Decrease

Reed Cavendish Wealth Management - China's companies reduce spending on foreign mergers and acquisitions but adopt a more strategic approach.

Analysts at Reed Cavendish Wealth Management say China is adopting a more calculated and rigorous approach to its acquisitions of foreign companies.

Overall growth in the number of foreign merger and acquisition deals is declining but many Chinese companies are learning from blunders of the past, and the result is more streamlined foreign investment deals.

During the first 6 months of 2018, Chinese foreign acquisition deals reached a paltry $22 billion dollars, less than half of the $56.7 billion recorded last year and less than a quarter of the year before.

Reed Cavendish Wealth Management analysts say the decline in foreign acquisitions could be caused by a number of factors, including weaker Chinese currency, the ongoing trade battle with the United States and more stringent investment regulations imposed by other countries.

However, there remains plenty of opportunity for future expansion given that China only spends a fraction of the amount of percentage GDP spent by countries like Japan on foreign acquisitions.

China has sought to extend its economic influence internationally through its Belt and Road campaign, the goal of which is to resurrect old trade routes that would link it with areas including the Middle East, Central Asia, and Europe.

The transition for Chinese companies expanding overseas has been far from seamless with many countries showing concern over the fairness of financing and expenses for deals done under the Belt and Road initiative.

A number of important deals have not gone through, and Chinese companies are finding themselves faced with obstacles as foreign companies worry about security, but Reed Cavendish Wealth Management analysts say it is clear that Chinese firms are learning from past mistakes and becoming more skillful and strategic in their dealings abroad.

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Source: Reed Cavendish Wealth Management


Categories: Mergers and Acquisitions

Tags: Chinese acquisitions, Reed Cavendish Wealth Management, ReedCavendish