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Article 96


Corporate Dossier

The dragon’s on a roll

376 words
15 July 2005
The Economic Times
English
(c) 2005 The Times of India Group. All rights reserved.

This time it's not just Chinese exports, Americans are bracing themselves for the larger “China Threat” involving Chinese companies taking over American assets. In 2005, Chinese majors have announced overseas acquisition deals worth over $23 billion, compared to deals amounting to little over $2 billion in 2003. While the number of deals has gone down from 40 in 2003 to 23 in the first half of 2005, it just shows that Chinese companies now have a much larger appetite for overseas assets. There has already been a significant backlash in the US and politicians on both sides have now got involved in China National Offshore Oil Company's (CNOC) $18.5 billion cash bid for Unocal. This comes soon after Haier's $2.25 billion bid for Maytag and Lenovo finalising its take-over of IBM's personal computer division in May.

Americans remember a similar period in the 1980s when Japanese Ministry of International Trade and Industry co-ordinated a buying spree by Japanese companies of everything from Hollywood studios to paintings by Van Gogh. Now comes an increasingly assertive China - its companies flush with cheap cash and its government desperate to maintain its economic momentum. In the last two years some of the major deals outside America include CNOC acquiring Gorgon LNG filed and China Huaneng buying over OZGEN, both in Australia, China Network Communications buying a 20% stake in Hong Kong's PCCW, China National Petroleum buying Indonesia's PetroChina International and Shanghai Automotive (SAIC) buying South Korea's Ssangyong Motor.

And indeed, there are more deals in the pipeline with SAIC looking forward to more overseas expansion and, ZTE and Huawei, the two main producers of telecom equipment in China, rumoured to be interested in Marconi. While some are sceptical about Chinese companies' ability to turn around the troubled assets they are taking over and that too at a fairly high price, others suggest that it's just an indication of China integrating itself into the world economy, something that should be welcomed. But what is quite apparent is the pace and ambition of Chinese companies and brands in making their presence felt in global marketplace, which rivals only that of its government.

Document ECTIM00020050714e17f0003c


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