Chinese Overseas M&A Activity Sinks to Record Low in First Quarter, EY Says (Yicai Global) May 12 -- The value of mergers and acquisition deals made by Chinese companies overseas plunged to a historic low in the first quarter of this year, according to a new report by consulting firm Ernst & Young.
China’s overseas M&As slumped 65 percent to USD5.9 billion in the three months ended March 31 from a year earlier, London-based EY said in the report published yesterday. The number of deals also fell by a quarter to 107.
Telecoms, media, technology, and health care and life sciences were the largest categories by value, with the latter the sole area in which it increased.
Europe was the main market for Chinese M&As in the quarter at USD2.13 billion, though the value of deals slumped 74 percent from a year ago. European countries are speeding up the transition to renewable energy due to recent supply issues, EY said, adding that investment and cooperation opportunities in the region’s renewable energy sector will continue to grow.
Asia was the next biggest market at USD2.11 billion, down 63 percent from a year earlier. The region will become a key destination for Chinese corporate investments abroad thanks to the steady development of the Belt and Road initiative and increased demand for regional supply chain optimization under the Regional Comprehensive Economic Partnership, EY said.
For the North America region, Chinese M&As fell 41 percent to USD1.2 billion. The main investment sectors were technology, media, telecoms, financial services, and advanced manufacturing and mobility.
Cross-industry M&As will be the focus for Chinese corporate leaders this year, according to a survey of more than 2,000 executives, EY said.
Supply chains have been snarled by Covid-19 outbreaks and the rising cost of labor, raw materials, parts, and semi-manufactured goods, so strategic restructuring of the supply chain is needed, EY said. Over 90 percent of Chinese chief executives said they are actively reallocating operational resources and supply chains to reduce costs and avoid risks, the survey showed.
Editor: Futura Costaglione
