Observer Report
Beijing
Thus all the global countries were equally depressed by the COVID-19 pandemic, but in the first five months of 2020, foreign M&A (mergers and acquisitions) into China totaled $9 billion, surpassing Chinese outbound M&A activity in both volume and value terms for the first time in a decade, research firm Rhodiums partner Thilo Hanemann and founding partner Daniel H. Rosen wrote in an online report.
According to the report, the United States, Europe and Asia are concerned about a distressed asset buying spree by Chinese companies as the COVID-19 outbreak has slammed deal-making in both directions this year. Many governments enacted policies – some temporary, some permanent “to shield their companies from Chinese takeovers.
However, several months into the pandemic, the data tell a different story about cross-border M&A trends. There are no signs of a Chinese outbound investment boom, like the one seen after the global financial crisis a decade ago. Instead, takeovers are headed in the other direction: into China, according to China Economic Net (CEN) on Wednesday.
As global uncertainty escalates, more foreign companies are buying into China, including deals in industries of finance and technology. And recent deals offer clues about what is driving foreign appetite for Chinese assets.
As per Rhodium, Chinese consumption, policy liberalization, Chinese firms becoming leaders in some industries (through entrepreneurialism, industrial policy and other means) are attractive for foreigners to buy technology and industrial assets rather than build from scratch, listing examples like Pepsis $700 million acquisition of Chinese snack brand Be & Cheery, JP Morgans acquiring full control of its Chinese mutual fund joint venture for an estimated $1 billion and Volkswagens plans to acquire a 26% stake in Chinese battery maker Guoxuan High-Tech for $1.2 billion.