M&A Deal Comparison
Chinese firms is strengthening their global competitiveness with aggressive M&A attempts at home and abroad, while Korean businesses are still sitting on their hands for mega M&A deals.
The Korea Economic Research Institute (KERI) released a report entitled “China’s Supply Reform and M&A Vitalization” on August 8, saying, “The number of China’s M&As have shown a steady increase and the transaction volumes surged from US$100 billion (110.85 trillion won) in 2008 to US$270 billion (299.3 trillion won) in 2015.”
The amount of Korea’s M&A deals rose to US$70 billion (77.6 trillion won) last year, but the figure is as low as a fourth of China. The number of M&A deals by Chinese and Korean firms stood at 225 and 32, respectively, as of the first half of this year, showing a big difference.
In fact, China’s M&A deals are increasing at home and abroad. First of all, China Railway Rolling Stock Corp., Power Construction Corporation of China, China Ocean Shipping Group and Baosteel and Wuhan Steel Group ranked top in the world in terms of sales and assets through M&As in China. The number of Chinese government-led companies dropped 43.9 percent from 189 in 2003 to 106 in May this year.
The number of overseas M&A deals by Chinese companies has rapidly increased from 2013. The percentage of China’s overseas M&A attempts to the total deals increased from 19.4 percent, or 161 cases, in the first half of last year to 27.3 percent, or 225 cases, in the first half of this year. Chinese firms have secured both market share and technology at once by acquiring overseas companies in various sectors, such as insurance, manufacturing, consumer goods and cultural industries.
Kim Yoon-kyung, a senior research fellow at the KERI, said, “It is the strategy to prevent excessive competition among Chinese companies in the global market and to hold the dominant position by establishing one Chinese representative company.”