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Chinese Investors to Acquire $1.5 Trillion worth Foreign Companies in Next Decade

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Published on : Aug 08, 2017

As per Linklaters LLP, a global law firm that specializes in advising mergers and acquisitions, Chinese investors are ready to pour in US$1.5 trillion to acquire promising companies across the world over the next ten years, a spike of 70 percent in comparison to the previous decade. This escalation is overshadowing the regulators both at home and abroad for the Chinese investors, and the trend will most likely continue, suggests Linklaters report.

Chinese businessmen have spent nearly US$880 billion to buy assets in various countries in the past decade, and a number of governments are luring Chinese companies to come and invest with their manufacturing capabilities. That being said, US$75 billion worth of investment failed last year alone, owing to national security concerns. In the near future, China may have to surrender to the international pressure in order to liberalize its markets.

Security Concerns Hindering Chinese Investments

Most often, regulators bar bids from Chinese businesses when the industries are seen critical to their national security or economy as a whole, such as technology and infrastructure. One such example can be Aixtron SE, a German semiconductor equipment manufacturer, who had planned to sell-off to a China-backed company but were blocked by the U.S. government. The Committee on Foreign Investment in the U.S. had also terminated Go Scale Capital’s potential deal-making bid of US$2.8 billion for Lumileds, a lighting unit from Royal Philips NV.

HNA Group Co., a shipping giant and aviation company from China, is believed to be behind some of the most prominent overseas deals, and are facing government scrutiny. A number of Chinese banks that had issued loans to HNA, have held back in the recent times.