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Chinese firms urged to buy abroad

By Hu Yuanyuan (China Daily)

08:28, March 04, 2013

In 2012, there were 40 M&A deals valued at $11.1 billion involving Chinese companies in the United States, which, after Canada, is the second-largest destination for China's M&A capital, according to data from KPMG's Global China Practice. Qiu Jiong / For China Daily

United States is major target for mergers and acquisitions

The United States is expected to be the No 1 destination for Chinese companies seeking mergers and acquisitions in 2013, industry experts from international accounting firm KPMG said.

"Because of the strong capability in high-end manufacturing, competitive energy prices in the US, the strong support from local governments and the huge potential of the consumer market, the US is quite attractive for Chinese investors," said Peng Yali, director of research with KPMG's Global China Practice.

In 2012, there were 40 M&A deals valued at $11.1 billion involving Chinese companies in the US, which, after Canada, is the second-largest destination for China's M&A capital, according to data from the company.

"We've met a number of US local government officials who are eager to bring Chinese investors to get involved in the construction of local infrastructure. Chinese entrepreneurs should take the opportunity to strengthen their investment in the infrastructure and real estate sectors, especially in developed economies," Peng added.

A number of Chinese property developers have already made some investments in the US this year.

China Vanke Co, the country's largest real estate developer by market value, for instance, has teamed up with US real estate firm Tishman Speyer Properties to jointly develop a plot of land in San Francisco.

Wang Shi, Vanke's chairman, said Vanke signed an agreement last month to invest in its first project in the US. It set up a special team last year to research business development in the US.

The move marked the developer's first venture into the US market and demonstrated its commitment to explore the international market.

Wanda Group, the country's largest commercial property developer, has revealed it plans to invest $10 billion in the US over the next decade, particularly in hotels, retail and commercial property.

The company last year took over AMC Entertainment for $2.6 billion to become the world's largest cinema chain.

According to Peng, there are many M&A opportunities in the country's high-end manufacturing and new-energy sectors.

"However, in the traditional natural resources field such as petroleum, Chinese companies may face more pressure in taking over local firms," said Peter Fung, global chairman of KPMG's Global China Practice.

Chinese investors will be quite active in looking for M&A opportunities in the resources, services, high-tech manufacturing and new-energy industries, KPMG's research showed.

Also, more Chinese companies will prefer cooperation in overseas M&A, such as the cooperation between State-owned enterprises and private firms, or involving other investors in third-party countries, it added.

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