According to the "2023 China Overseas Investment Overview" (hereinafter referred to as the "Report") released by EY a few days ago, the total amount of overseas mergers and acquisitions announced by Chinese enterprises in 2023 will be 398300 million US dollars, a year-on-year increase of 203%, and has achieved quarter-on-quarter growth for three consecutive quarters, with a significant increase in large transactions compared to 2022.
According to the report, in 2023, there will be 21 overseas mergers and acquisitions with a transaction value of more than US$500 million, 13 more than in 2022. The total amount of mergers and acquisitions announced by Chinese enterprises in the Belt and Road countries is 173400 million US dollars, a year-on-year increase of 324%, higher than the overall growth rate. The proportion of Chinese enterprises in M&A in BRI countries increased by 4 percentage points year-on-year to 44%.
From the perspective of industries, in terms of M&A value, the top three popular industries for overseas M&A by Chinese enterprises in 2023 are TMT (technology, entertainment and communications), advanced manufacturing and transportation, and medical and life sciences, accounting for 53% of the total M&A value. With the exception of financial services, all other sectors saw varying degrees of growth in the value of M&A, with the oil and gas and consumer goods sectors seeing significant increases. In terms of the number of mergers and acquisitions, the top three popular industries are TMT, advanced manufacturing and transportation, and financial services, accounting for 55% of the total. Only financial services and power & utilities recorded growth. As a result, Power & Utilities was the only sector to record growth in both value and volume during the period.
It is worth noting that in the Belt and Road countries, Chinese M&A mainly focuses on advanced manufacturing and transportation, power and utilities, and TMT industries, accounting for 62% of the total M&A of Chinese enterprises in the Belt and Road Initiative.
According to the report, in 2023, the target industries of Chinese enterprises' overseas M&A will still have obvious regional distribution characteristics. TMT and the Health & Life Sciences industry are the second division of North America and Europe; 84% of outbound M&A in the power and utilities sector is concentrated in Latin America, and nearly 60% of overseas M&A in the sector in the past five years (2019-2023) has been in Latin America. In 2023, the oil and gas industry recorded its first major transaction of more than US$1.5 billion in the past five years, with the acquisition of a Pakistani oil refining company by a Chinese company.
In terms of regional segments, Asia has become the most popular investment destination for Chinese companies for the fifth consecutive year, with Singapore, Kazakhstan, South Korea and Indonesia among the top 10 overseas M&A destinations for Chinese companies in 2023. Overseas M&A in Asia's oil & gas, advanced manufacturing & transportation, and consumer goods sectors recorded significant year-on-year growth.
For Europe, the top sectors in terms of M&A value are TMT, Advanced Manufacturing & Transportation, and Health & Life Sciences; The main destinations were the UK, Germany, Poland and the Netherlands, which together accounted for 83% of the total M&A announced by Chinese companies in Europe. The largest M&A transaction announced by a Chinese company in Europe was an agreement between a Chinese company and a well-known UK pharmaceutical company to obtain an exclusive license for the overseas development and commercialization of an oncology** drug. The report points out that in 2024, despite the multiple pressures on European economic growth, with the slowdown in inflation and the improvement of the job market, the strong purchasing power of the European market is still one of the important considerations for many Chinese companies to "go global".
In North America, 99 percent of the M&A was announced by Chinese companiesUS$200 million, up 133% year-over-year, with this significant increase mainly due to a low base in 2022. Chinese M&A in North America is mainly in the TMT sector (51%) and the healthcare and life sciences sector (24%). According to the report, the United States will hold a general election in 2024, and its economy and foreign policy are still facing many uncertainties, and Chinese companies should still maintain a high degree of caution when investing and operating, and improve risk management awareness.
In addition, the amount of mergers and acquisitions announced by Chinese companies in Oceania is 35300 million US dollars, a year-on-year increase of 1152 per cent, mainly in Australia's consumer goods, mining and metals sectors, each accounting for about one-third. According to the report, with the warming of China-Australia relations in 2023, the economic and trade relations between the two countries will gradually recover, and it is expected that the two countries will strengthen cooperation in the fields of climate change, new energy and green infrastructure in the future. The amount of M&A announced by Chinese companies in Latin America was 34800 million US dollars, a year-on-year increase of 822%, mainly in the power sector in Peru; The amount of M&A announced in Africa is 7300 million US dollars, down 30 percent year-on-year1%, Egypt is the most popular M&A destination for Chinese companies in Africa.
At present, Chinese enterprises have entered a new stage of going overseas, and a large number of outstanding enterprises represented by Chinese technology and Chinese brands are accelerating their overseas layout and exploring new growth points; At the same time, the achievements of industrial transformation and upgrading of Chinese enterprises in recent years are also accelerating the development trend of global digital economy, green economy and industrial chain reshaping. Zhou Zhaomei, Global Head of EY China's Overseas Investment Group, said that in 2023, despite the complex international political and economic development situation, China's economic external circulation continued to develop steadily and continue to practice multilateralism. Looking forward to 2024, the world has entered a super "** year", and the world's geopolitical landscape will face more severe challenges, but China's policy of adhering to a high level of opening up has not changed, and it is expected that "going out" will still become a new growth strategy for many Chinese enterprises under the strong impetus for enterprises to seek development.
*: China ** Daily Author: Zhang Hanmei.