Screening of acquisition to tighten
(Shenzhen Daily)
Updated: 2006-06-19 10:21 Arthur Kroeber, managing director of Dragonomics, a Hong Kong-based economic
research firm, said the Wen Wei Po report was significant.
"It's one of the winds blowing through the government, that China has given
enough ground to foreigners and now it is time to start drawing lines in the
sand," said
Plans to curb foreign acquisitions play into two currents of opinion in
China, Kroeber noted -- a "New Left" school which feels too much attention may
have been paid to economic growth at the expense of social fairness, and
officials who worry China's home-grown manufacturing industry is being left at
the bottom of the global value chain.
China is much too dependent on foreign capital to start turning away large
amounts of foreign investment, but more individual deals may be blocked and
foreign acquirers will have to lobby the government harder, Kroeber predicted.
In one of the latest controversies over foreign acquisitions, Chinese
machinery maker Sany Corp. announced last week that it was prepared to challenge
U.S. private equity firm Carlyle Group for control of Xugong Group Construction
Machinery Co.
Carlyle agreed last October to pay US$375 million for 85 percent of Xugong,
and insists the deal will go ahead. But it has not yet obtained Chinese
Government approval, and Sany's announcement raised the possibility of it
emerging as a "national champion" to keep Xugong in Chinese
hands.
(For more biz stories, please visit Industry Updates)
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