China’s Strong Outbound M&A Activities “Expected to Continue”

November 14, 2016

CKGSB Assistant Dean Zhou Li told Forbes Korea that Chinese firms’ strong outbound M&A activities will continue regardless of the stagnant global economy, while also explaining the current status of Chinese firms’ globalization strategies, how they are different from companies of other markets and the future of China’s outbound M&A.

CKGSB Assistant Dean Zhou Li shared his views that Chinese firms will remain active in the global M&A market regardless of the slowing global economy, at a recent interview with Forbes Korea, the local edition of Forbes magazine published by Korea’s top media group JoongAng Media Group.


Assistant Dean Zhou Li shared his insights about Chinese firms’ globalization strategies

and outbound M&A deals with Forbes Korea at a recent interview in Seoul


The business monthly named China as the “new deep-pocketed acquirer” in the global M&A market, of which its strong appetite for M&A has reached such a peak that some countries consider China as a threat due to its highly-diversified acquisition portfolio.


Introduced as an expert in Chinese businesses’ globalization strategies and M&A, Assistant Dean Zhou forecast that the Chinese firms will continuously seek outbound M&A to serve its domestic market with quality products and services. He stressed this is the main difference from companies in other markets that undertake M&A to explore local markets.

“In the past, globalization strategies aimed at expanding exports, but now, globalization helps companies win the local market,” Zhou said. “[It is because] consumption in the Chinese market is picking up.”

Assistant Dean Zhou picked CKGSB alumnus company Fosun Group as one of the prime examples that well reflects this changing trend. In the past, it has positioned itself with a business portfolio of property, finance, steel and healthcare, but its recent investment in entertainment – although it has not much expertise in leisure businesses – has been carried out to serve a growing middle class and its expanding purchasing power.

“The purchasing power of the top income households – the super-rich people accounting for only 2 percent of the population – is saturated. They don’t need [to purchase] any more, they already have what they need,” Zhou said. “Now there is a huge middle class. A lot of companies are realizing that that is the gold mine, and are encouraging the middle class to spend on entertainment and healthcare.”

Chinese firms’ acquisitions of European high-tech companies in sectors like robotics and biotechnology are aimed at absorbing advanced technologies and talents to upgrade technical and manufacturing standards, Zhou added.


Assistant Dean Zhou Li introduced successful outbound M&A cases done by CKGSB alumni companies including Fosun Group and Didi Chuxing during an interview with Forbes Korea

Assistant Dean Zhou said Chinese firms are expected to continue strong outbound M&A activities, in particular with US-based companies to learn corporate culture and business practices. As a strategy, some CKGSB alumni companies are investing in Chinese firms that have gone public in the US stock market.

Lastly, Zhou advised Korean firms to leverage business opportunities that occur amid China’s aggressive outbound M&A activities, noting that Korea is one of the few Asian nations that have a high understanding of both Western and Asian markets.

“I always tell Korean business people to think globally beyond the local market, as the Korean market is limited in its size,” Zhou said. “Korea will be able to find business opportunities while bridging Chinese and Western companies, helping Chinese firms’ globalization and Western firms entering China.”

To read the original Korean article by Forbes Korea, please click here.

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