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IN DEPTH: Have Outbound Investments Peaked for Now?
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Have Outbound Investments Peaked for Now?
By Harold Murphy

BT 201807 INVESTMENT 02      在全球范围内,我国经济的发展速度受世界瞩目,企业发展更是从传统的产品服务销售迈向大规模的融资与投资领域;无数企业跨出国门,走向世界,寻找并购与合作。自2006年以来,我国企业在海外并购与投资额稳步增长,企业投资主要集中在欧洲和北美地区。2015年至2016年间,我国在欧美地区的海外投资总额就增长了一倍多,从410亿美元增至940亿美元,并于2016年达到了1700亿美元的历史最高水平。去年,我国企业对外投资并购持续活跃,境外融资比例高。根据2018年1月商务部发布的数据显示,2017年我国共对全球174个国家和地区的6236家境外企业新增非金融类直接投资,累计实现投资1200.8亿美元,同比下降29.4%。其中,跟随国家“一带一路”的号召,我国对“一带一路”沿线国家投资合作稳步推进,共对59个国家新增投资,合计143.6亿美元,占同期总额的12%,比去年同期增加3.5个百分点。

      我国企业海外投资的行业布局更趋向于多元化,涉及到采矿业、租赁和商务服务业、住宿和餐饮业、文化、体育和娱乐业、农林牧渔业、金融业、制造业、信息传输、软件和信息技术服务业共8类行业。高端制造业和信息技术成为最主要的两大海外投资并购增长点。

      截至目前,在各类海外并购中,中国化工对先正达的并购创下了收购金额的最高记录。去年6月,中国化工集团公司宣布完成对瑞士先正达公司的交割,收购金额达到430亿美元,成为中国企业最大的海外收购案。先正达是一家具有259年历史的百年老店,总部位于瑞士巴塞尔,是全球第一大农药、第三大种子的高科技公司,销售收入达900亿,净利润达84亿。并购后,中国化工拥有先正达94.7%股份,这意味着中国化工跻身全球农化行业第一梯队。

      在2017年排名前100的海外投资案中,约有25%投资于科技和电信行业,几乎是2016年的两倍。腾讯和阿里巴巴是中国在科技领域海外投资方面最活跃的公司,它们在2017年完成了7项海外投资,总额约95亿美元。

      但其实早在2016年末,发改委等四部委就曾表态,“密切关注近期在房地产、酒店、影城、娱乐业、体育俱乐部等领域出现的一些非理性对外投资的倾向”。 中企海外并购意味着更多的资金流向国外,会对外汇储备和人民币贬值造成一定压力。海外并购在2016年的井喷式增长之后,在近两年已逐步回归理性轨道。

Chinese companies enjoyed a stellar decade of outbound investments. Value of overseas mergers and acquisitions by Chinese firms has steadily increased since 2006, with major investments being made in the regions of Europe and North America. In fact, the economic climate has been so well that Chinese outbound investments in these regions more than doubled from 2015 to 2016 alone, rising from $41 billion to $94 billion, and the total value of Chinese overseas investments reached an all-time-high of $170 billion in 2016. Large Chinese companies such as Fosun, Wanda and Anbang accounted for more than a quarter of the total asset buying in Europe and North America.
 

Geopolitical Climate is Changing

However, since 2017 the geopolitical climate has changed a bit. Protectionist measures in the United States, Europe and China and their related policy changes have disrupted the playground for mergers and acquisitions and foreign direct investment (FDI). The following chart shows a clear decline in the value of Chinese global M&As’ announced for 2017.


BT 201807 IN depth 01Total value of announced Chinese M&As, worldwide

Nature of Chinese investors and their targeted geographic locations have also been impacted by these developments in such a way that Chinese state-owned enterprises and sovereign wealth funds have started to play an increasingly important role in outbound investments. This comes as no surprise since China wants to increase its regional presence with developmental strategies such as the Belt and Road Initiative.
 

As a result, the value of Chinese outward investments fell by 35% in North America and reached $30 billion in 2017 – significantly lower than $48 billion the year before. Europe was also hit, but the takeover of the European agricultural giant Syngenta by ChemChina still increased the value of investments in Europe to $81 billion. It is important to note that the mentioned takeover by ChemChina is the largest Chinese foreign acquisition to date, worth a staggering $43 billion. The shift in Chinese policies regarding outbound investments also hit complete industries and imposed certain restrictions on investments in foreign real estate, sports, hospitality and entertainment. In addition, Chinese companies are now required to register foreign deals valued at $300 million or more with the National Development and Reform Commission, and all deals in “sensitive” industries and countries are now subject to approval from Beijing.
 

The extremely high value of outbound investments caused a large capital outflow from China, a country which has to balance inflows and outflows in order to maintain a stable exchange rate for the Yuan. The Chinese government also wants to prevent “uncontrolled” capital exodus and redirect them to important state strategies such as the mentioned Belt and Road initiative. The following table shows the top Chinese FDI transactions in Europe and North America in 2017.

BT 201807 IN depth 02Syngenta Takeover by ChemChina

The $43 billion takeover of Syngenta remains the largest foreign acquisition of a Chinese company till date. The deal between ChemChina and Syngenta was announced in February 2016, after majority of Syngenta’s shareholders agreed to ChemChina’s offer of $465 per share. China expects to benefit from Syngenta’s large portfolio of high-quality agricultural chemicals and patented seeds in order to overhaul its domestic agricultural industry. Syngenta, which will keep its headquarters in Switzerland, operates in more than 90 countries worldwide under brand names such as Beacon, Callisto and Acuron.
 

Technology and Telecommunication Investments: Tencent and Alibaba

Tencent Holdings and Alibaba Group Holding were among the most active Chinese companies in outbound investments in the technology sector. According to the 2018 China Enterprise Cross-Border M&A Special Report, both companies completed seven outbound investments in 2017, which totaled around $9.5 billion. Tencent acquired a minority stake in Flipkart, India’s largest e-commerce website, and invested around $900 million in the US medical startup Grail.
 

Alibaba, on the other hand, focused on the technology and telecom sector and invested around $1.1 billion in PT Tokopedia, an Indonesian-based e-commerce platform.
 

Around 25% of the top 100 Chinese outbound investments in 2017 were in the technology and telecommunication sector. This is almost a twofold increase as compared to 2016. However, in terms of value, outbound investments in the sector declined by 30% year-on-year, and the Chinese policy changes which list the telecommunication sector as a “sensitive industry” could lead to an even further fall.
 

Chinese Takeover Deals in Europe

Chinese investments in Europe remained focused on the largest European economies, with France, Germany and the UK accounting for 75% of the total Chinese investment in Europe in 2017. The following chart shows the value of Chinese FDI in 2017 as compared to the previous years.

BT 201807 IN depth 03Chinese FDI in the EU by year

The largest Chinese takeovers in the region were CIC’s takeover of Logicor for $14 billion, China Jianyin Investment and WRC’s takeover of NXP Semincounductors’ Standard Products for $2.8 billion, and Wanda’s takeover of Nordic Cinema Group for around $0.9 billion.
 

Summary

The worldwide economic recovery from the 2008 financial crisis revealed a number of lucrative takeover opportunities for Chinese companies. Still, the new Chinese policy changes which require that all deals above $300 million have to be registered with the NDRC and deals that aim at “sensitive industries” have to get an approval directly from Beijing reduced the total value of Chinese outbound investments in 2017.
 

China wants to prevent large capital outflows, which peaked at around $50 billion monthly, and focus on strategic development projects such as the Belt and Road initiative. The maintained exchange rate corridor also calls for a balance of inbound and outbound investments in order to keep the rate of dollar vs yen stable. As a result, we might see new reductions in the value of Chinese outbound investments over the coming years as domestic companies are encouraged to rationalize their overseas acquisitions and investments.

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