(Yicai Global) Jan. 25 -- Chinese firms completed less mergers and acquisitions last year amid stiffening foreign investment policies. Mergers with European companies, however, surged.
Chinese firms conducted offshore M&As worth USD108 billion, down 2.9 percent from 2017, financial media 21st Century Business Herald reported, citing a report from consulting agency Ernst & Young. Europe remains the main target, taking up the lion's share of 60 percent of the tally.
Chinese firms spent USD65.9 billion to consolidate with European companies, up 38 percent from 2017. The number may decrease this year if the European Union will implement its draft of new framework regarding foreign direct investment screening.
"The international geopolitical situation is unpredictable," said Zhou Zhaomei, the global head of China Overseas Investment Network at EY. "Many countries and regions have tightened or plan to tighten their foreign investment policies, so risks have further increased."
Most of the company consolidations, or 29 percent of the total value, involved the sectors of electric power and public utilities, showing a three-fold increase from the previous year. Consumer goods ranked second with a 15 percent portion, while doubling from 2017. The field of technology, media and telecom was third with 14 percent.
Chinese companies spent USD15.7 billion on M&As in North America. The number was basically unchanged from that in 2017. Last August, the US passed an act to enhance the safety review of M&As, which suggests that Chinese corporate investors may face stricter scrutiny and more political resistance in future.
"It is suggested that investors pay close attention to the policies to effectively prevent and control risks," Zhou added.
Editor: Emmi Laine