Huge growth of Chinese M&A expected in 2010


Chinese outbound investment has been unproductive to say the least until now.  The learning curve for overseas investment is fraught with difficulties legally, regulations, labor and technology.  Many nations are rightly concerned that China is trying to control world recourses.  In the case of rare earths and a possible blockade, this could be a reasonable fear.  However, overall, Chinese investments overseas are quite small.  In fact, in Australia, at the time of writing this article, Chinsese FDI contributes less than 1% to Australia’s foreign investment total.As China has focused on less developed nations with less than stable political systems, the learning curve is extremely steep. Totalitarian governments can work deals with firms investing but it does not solve this issue of how the local population views the taking of recourses. In that respect, Chinese investment in Australia is a good place to learn.  Africa and Latin America offer an environment with a higher risk/return ratio.In trading, the rules are clear.  A dispute can be taken to the WTO.  However, in FDI the rules are less clear and more subject to change.  Mergers and Acquisitions (M&A) are more political than economic at times.  Resource investments, FDI, Private Equity, M&A, private equity investment, venture capital, real estate venture capital, tax lien investing, capital management, starting a hedge fund, these are the next challenges for the China International Capital Corporation Limited – CICC in the future.


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