Skip to comments.Going Global? Not So Easy (China)
Posted on 10/10/2013 1:58:21 AM PDT by TexGrill
As the world tries to recover from the financial crisis, China has once again astonished everyone with its exorbitant and frequent overseas buying.
Shuanghui International Holdings Ltd., China's largest meat producer, offered to buy U.S. pork giant Smithfield Foods Inc. The deal was given the go-ahead from the Committee on Foreign Investment in the United States. If completed, the deal worth $7.1 billion will be the largest acquisition of an American firm by a Chinese company.
Numerous Chinese firms made a name globally by acquiring their more renowned foreign peers. Chinese IT firm Lenovo acquired IBM's PC division in 2005, bringing more brand recognition to Lenovo and an increased market share both at home and abroad. In 2010, Geely, a Chinese automaker based in east China's Zhejiang Province, bought a 100-percent share of the Sweden-based Volvo. Volvo's sales volume is expected to hit 800,000 units by 2015. This year, China National Offshore Oil Corp. Ltd. (CNOOC) acquired Canadian oil and gas company Nexen for $15.1 billion. CNOOC's oil and gas output is expected to increase by 20 percent and its proven reserves may grow by 30 percent after the Nexen purchase.
As more Chinese companies clamor to go global, the country has vaulted to become the world's third largest overseas investor in 2012, a significant jump from the sixth spot in 2011.
Nevertheless, Chinese Vice Premier Ma Kai said outward investment by Chinese companies is still in a nascent stage. Ma's remarks came in his keynote speech at the 17th China International Fair for Investment and Trade (CIFIT), which opened on September 8. The CIFIT has been held in Xiamen, a coastal city in southeast China's Fujian Province, annually since 1997.
"Chinese companies lack competitive experience when going global," said Ma.
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