Page - 1

For the past few years, China has emerged truly as the land of "Dragons" - which have a strong appetite - in the business context it means Chinese firms are lapping up whatever they see as fruitful investment at a break neck speed. Examples are: -

Acquisition of IBM's PC business by Lenovo:
Late last year Lenovo, China's leading PC-maker, which is connected to the government through its ownership by the Chinese Academy of Science, bought the PC business of IBM for $1.75 billion. Under the terms of the deal, Lenovo acquired the right to use the IBM name on its computers for five years.

Acquisition of TV making business of Thomson by TCL:
In early 2004, China's TCL bought the television-making business of France's Thomson, making it the world's leading volume manufacturer of TV sets.

Hostile bid for Unocal, a US Oil & Gas Firm by CNOOC:
China's biggest strike so far is an offer for Unocal, a California-based oil and gas firm. The state-controlled China National Offshore Oil Corporation (CNOOC) made a cash bid of $18.5 billion for Unocal trumping a $18 billion share-and-cash offer from Chevron, America's second-largest oil company.

Reasons for this huge appetite for assets abroad are not difficult to find.

Last year Chinese economy grew at a rate of 9.6 % and slowing down is not imminent in the near future. Also, there is a thinking in the State echelons that China shall be able to truly arrive in the World stage when the top 50 firms of the country become truly multinationals which ate globally competitive - and what better than acquiring huge assets and brand names abroad to make it happen!

With Chinese economy guzzling commodities like oil & steel to sustain its blazing GDP growth, it is but a natural and logical step to go abroad and shop for relevant assets.

Next

* Contributed by -
Vipin Arora,
B.Tech. (Polymers), H.B.T.I. Kanpur,
MBA (Batch 2004-06),
Dept. of Management Studies, I.I.T. Roorkee.