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Many Chinese companies looking for foreign mergers

Reporter: Liu Yang 丨 CCTV.com

11-20-2016 03:41 BJT

By CCTV reporter Liu Yang

A number of Chinese companies have merged with overseas operations in recent years, particularly in fields such as environmental protection and real estate. But some recent proposed mergers in Australia and Germany were rejected out of "national security" concerns.

CCTV reporter Liu Yang visited one company in Sichuan province to find out more about the challenges and opportunities facing Chinese companies. 

These products used in sludge treatment will soon be used in a water treatment plant in New York.

As a leading Chinese environmental company, Techcent focuses on services and engineering in the field of environmental technologies. Since 2014, the company has made four major overseas mergers and acquisitions in Germany and the United States.

"The last two M and As in Germany have given us a good reputation. From technology to engineering construction. It has formed complex systematic environmental services," said Deng Qinhua, Chairman of Chengdu Techcent Environment.

Reputation and technology are the big gains. Recently, the company acquired 100 percent of Bilfinger Water Technologies. The firm was one of the world's leading providers of water treatment technology. M&A has helped this Chinese company fast forward its development.

"We are looking for A, the brand, B, the technology, C, low costs, and D, the team. All these targets add up. We compare the offer domestically with companies overseas from Germany or the U.S. We found that companies from overseas can give us all the above content," said Yang Wu, Vice President of Techcent.

According to Xinhua News Agency, China's overseas mergers and acquisitions were worth a record 134 billion U.S. dollars in the first half of 2016. However, China's purchasing power has raised concerns in the West, especially in countries such as Australia and Germany.

In August this year, the Australian government rejected China's State Grid Corp's bidding for its largest electricity network, citing "national security" concerns. Another example is recent delays surrounding a China-financed nuclear power station in the UK

Senior Visiting Scholar from Stanford University, Tang Jiqiang, says for M&As to succeed, they need more support at national level.

"Nowadays the strong resistance is in high-tech field, such as IT and biological technology. I think the problem is that we need unified coordination on overseas M&As. Secondly, we need greater efforts towards diplomacy. Chinese and overseas enterprises have cultural differences, some of them quite large," Tang said.

Over the years privately-owned Chinese firms account for two thirds of the 20 largest overseas M&As and there are certainly mutual benefits for both sides. 

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