Merger And Acquisition Wave Expected in Next Decade

A merger and acquisition wave is expected to emerge in China in the next decade and give a big impetus to economic development, according to a research report published recently by the Financial and Securities Institution at the People's University in Beijing

The report, by Wang Mingfu, Li Fengyun and other experts, foresees large-scale mergers and acquisitions in China in the ten years with the development of information technology, bioengineering and other new industries.

Experts point out that mergers and acquisitions are presently underway in many industries with powerful multinationals as major players. If China joins the World Trade Organization, mergers and acquisitions will become inevitable as many industries would be exposed to tougher competition from multinationals.

They predict that future mergers and acquisitions will occur between top enterprises in China involving enormous amounts of capital.

Current barriers to mergers and acquisitions such as obscure business ownership, cross-debtedness and laid-off workers, will be resolved in the future, paving the way for Chinese businesses to enter the international market for mergers and acquisitions and allow foreign businesses to take bolder steps in mergers and acquisitions in China.

The report points out that mergers and acquisitions are an important tool for enterprises to expand their market shares or start new businesses.

Through merger and acquisition, more than 190 publicly-listed companies in China transformed their main business between 1997 and late 1999 from traditional industries to high-tech industries, according to the report.

The report says that the anticipated merger and acquisition wave will produce China's own giant conglomerates, improve its industrial structure, optimize the allocation of resources, and sharpen the competitive edge of the nation's economy.

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