Merging of Chinese firms with foreign capital now a trend

Beijing(China)—Deals to merge Chinese firms with foreign capital still limited Incorporation of Chinese enterprises with capital from overseas has become a new practice in recent years. Some inclined changes have occurred in China’s use of capital from overseas as a growing number of transnational firms come to develop and expand their business in the country with an apparent upsurge with the merging of Chinese enterprises by foreign capital.
American investment giant Carlyle Group has purchased the Xuzhou Construction Machinery Co., LTD in east China’s Jiangsu province. The world iron and steel giants Mittal and Arcelor bought shares of the Huling Tubing Plant and Laiyang Steel Mill respectively, the German Luk/INA/FAG purchased the Luoyang Ball Bearing Plant and, most recently, an ace French Kitchen ware maker, Gruope SEB purchased Subo’er group, and all above merging cases have provoked heated debate.
China has basically taken joint venture, cooperative projects and sole foreign investment as means of investment over the past two-plus decades since it began attracting foreign capital. In the past two years, however, transnational firms began turning to big purchases in heavy and chemical industries, basic materials trade and consumer goods production sector. In the beer trade alone, top global beer firm Anheuser-Busch (AB) purchased the Harbin beer brewery, Scottish & New Castle PLC purchased the Chongqing Beer Brewery and Heineken from the Netherlands bought shares of the Yuhai Beer Brewery, and Belgian Inbev Group bought 100 percent stake of the Xuejin Beer Brewery from east China’s Fujian Province at the cost of some 5.9 billion yuan (about 740 million US dollars).
Transnational firms have pick up the pace of incorporation investment in China’s service sector. Cao Yuanzhen, chairman of board of directions and first CEO of the Bank of China International holdings, holds that as the transition period for China’s entry into the World Trade Organization (WTO) is about to expire, these firms now intentionally wave “olive branch” to Chinese service busines, and banking, insurance, tourism and retailing services in particular. These transnational firms tend to invest by means of merging, such as Hongkong-Shanghai Banking Corporation (HSBC) buying shares of the Bank of Communication, Deloitte incorporating with the China Accountants Business Firm, the Newbridge /capital LLC from the U.S. buying shares of the Shenzhen Development Corp. LTD and Morgan Stanley purchasing Yongle Home Appliances Corp.

—Daily Mail, People’s Daily news exchange item