Voice from China
Update on the M&A market in China
The Chinese economy surpassed expectations and delivered a positive end to the Year of the Ox, with GDP growth of 8.1% while M&A deal values rose significantly, especially for inbound transactions. Our latest Voice from China review of the country’s M&A market sees Angela Chen, principal of Oaklins’ Shanghai office, assess the reasons behind these increases and the outlook for 2022.
2021 was also a better-than-expected year for the cross-border M&A market. Deal values for inbound M&A soared by 90.1% over 2020, while outbound deal values rose by a strong but more sedate 60.6% year-on-year.ANGELA CHEN, PRINCIPAL, OAKLINS, CHINA
We summarize the factors that could encourage outbound M&A to continue its upward trajectory, including interest rate cuts and greater participation by Chinese private equity firms in M&A, and provide an overview of China’s changing growth strategy.
The specifics of recent M&A activity are also considered, both inbound and outbound transactions, in terms of sectors and regions; Europe and Asia Pacific continue to lead the way in cross-border deals, while finance, technology services and commercial services were the most popular sectors.
In our Spotlight section, we focus on the technical textile (TT) sector. These materials are defined as those that have a more functional and technical role, rather than esthetic or decorative, and the industry is a relatively new one in China. However, with the Chinese government regarding the TT sector as one with strategic importance, and bearing in mind that the market is currently highly fragmented, we explore the probability of a rise in transactions in this area going forward.
Finally, we consider almost 30 outbound acquisitions made by Chinese companies in the second half of 2021, which cover a range of both sectors and regions.
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For more expert commentary on the M&A market in China, download the PDF below