From light assets to heavy assets, the new trend of Chinese enterprises going overseas: seeking industrial upgrading
In recent years, influenced by factors such as the shift in domestic economic growth, rising corporate competitiveness, and accelerated international geopolitical competition, Chinese companies' overseas investment and cross-border transactions have gradually become more enthusiastic, the scale of cross-border transactions has continued to expand, and the proportion has continued to rise.
Bain & Company released a report titled "Win-win Cooperation, Building a Solid Foundation: Latest Research and Insights on Chinese Enterprises Going Global in 2024" today, which shows that in 2023, the amount of funds invested by Chinese enterprises going global will increase by 11% compared with 2022, and the number of enterprises will increase by 23%. At the same time, nearly half of the large-scale corporate mergers and acquisitions and private equity investments in 2023 will involve going global. Among them, technology and cloud services, high-end manufacturing, healthcare, and energy resources are the main industries for Chinese enterprises to invest overseas.
The report pointed out that after the COVID-19 pandemic, as the international economic situation became more complicated, Chinese companies began to seek industrial upgrading by going overseas, and the proportion of technology information and medical health targets increased significantly. In addition, more and more companies gradually shifted from the asset-light model of "Chinese companies with overseas business" to the asset-heavy model of "global companies with Chinese roots". Among the investment destinations, Southeast Asia and Europe have become the first choice for Chinese companies.
Liu Xiangping, global partner of Bain & Company and chairman of industrial products, manufacturing and automotive business in Greater China, believes that the changes in the industries in which Chinese companies go overseas reflect that they can flexibly adjust their strategies according to changes in the international environment, and also show their endogenous demand for industrial upgrading. Zhou Hao, global partner of Bain & Company and chairman of private equity funds and mergers and acquisitions business in Greater China, pointed out that when conducting cross-border investment and mergers and acquisitions, companies need to pay more attention to the political, legal and regulatory environment of the target market, adjust investment strategies in a timely manner, and maintain flexibility and adaptability.
Zhou Hao suggested that Chinese companies should be willing to invest resources in in-depth research on target markets, use investment and mergers and acquisitions as the company's core strategy, and formulate transaction target screening criteria accordingly.
The report believes that "going overseas" has become a "must-do" for Chinese companies in the new era. In the process of "going overseas", whether Chinese companies can establish the "resilience" of industrial layout, whether they can build a complete investment and M&A strategy, and whether they can use capital to create a new growth platform will become the key factor in whether companies can survive and grow overseas.