Not long ago, the big news about China was on large numbers of mainland tourists raising hackles through bad travel habits. Now as the country’s growth finally slows down (last year’s was its slowest in 25 years), Chinese companies are starting to travel overseas on corporate shopping sprees: buying up shares in companies around the world.
You don’t have to look far for the reason. With the slowing economy, companies can still gain inorganic growth via acquisition.
Ownership of a foreign firm also opens new doors, namely for them to access foreign markets, and new assets, from the acquired company’s supply chains to their R&D capability.
Here are just five of the many big bids Chinese companies recently made, with more surely in the works.
1) Shopping for an E-Grocer
Price tag: US$30-40 million
Singapore’s own Redmart, an e-grocer where you can buy everything from yam to spam, looks set to be acquired by Alibaba-backed Lazada, possibly to extend its product range beyond mere electronics, clothes, beauty, and home and living.
And with a rival Amazon preparing to enter the South East Asian market via Singapore in 2017, Lazada may well be sharpening its competitiveness for an e-shopping turf war.
2) Buying the Stock Exchange
Price tag: US$22 million
Everyone has heard of buying stocks, but buying a stock exchange? Yes, Chongqing Casin Enterprise Group has bought up the ailing Chicago Stock Exchange in an attempt to bridge the US and Chinese markets.
Buying the 134-year old bourse also helps a company already struggling against larger rivals like the New York Stock Exchange and Nasdaq, with only 0.5% of the US stock trade.
The buyover however did prick up political ears, with a US Republican – backed by 45 mainly Republican signatures – urging for a review of the deal and hinting at undue influence on Chongqing Casin by the Chinese government.
A stock exchange spy outpost? Sounds a bit like speculation.
3) Owning the Supercell
Price tag: US$8.6 billion
Supercell, the company that brought you the top grossing app ever – Clash of Clans – sold a controlling 84% of itself to TenCent, a Chinese company that owns many of the most popular internet portals in China plus the ubiquitous WeChat.
The deal is expected to benefit the Finnish company too by opening China’s markets up to them – including China’s legions of gamers.
4) Key to Robotics
Price tag: about US$5 billion
What do home appliances have to do with robotics? Well if you’re a company facing higher labour costs in China, you might well make a stronger push for automation like Midea did.
This Chinese company is bidding to own an additional 81.04% of Kuka AG, a German company and global leader in articulated robots – if German regulators find no risk of strategic technology being leaked along with the sale.
5) Land Ho!
For a country that already spans 9.59 million km sq you’d think the last thing China needs is more land. However a consortium led by Dakang Australia recently made a failed bid for 80% of a vast Australian property called S. Kidman and Co.
As Australia’s largest farming estate, it stretches over South Australia, Western Australia, the Northern Territory and Queensland, and accounts for about 1% of Australia’s total land area.
The deal was eventually rejected over as it “may be contrary to the national interest”, although a more recent bid by Shanghai Cred for 33% of S. Kidman and Co. is still on the table.
The sheer scale of China is often daunting, even when we’re talking about money-toting tourists, or ginormous cheques signed by MNCs. But after all that’s only to be expected when giants go shopping.
By Vincent Tan
