Chinese have the reputation to buy by means of state subsidies in the foreign medium-sized companies in the high technology area. A study by the Ifo Institute comes to a very different result.
buy Chinese investors, mainly larger firms, higher levels of debt and low profitability. The advantage of such transactions is that they are relatively cheap, investors therefore pay less.
The results of the analysis of a group of researchers led by Ifo President Clemens Fuest. The authors Clemens Fuest, Felix Hugger, Samina Sultan, and Jing Xing have been studied for over 70,000 cross-border acquisitions of firms in 92 countries between 2002 and 2018. At 1,900 Acquisitions, the buyers came from China, in 171 cases, Chinese investors ‘ acquisitions of German companies.
Seven times
A dragon with the inscription “Fu” (happiness, blessing) in front of the Panorama of Shanghai
on average, companies taken over by Chinese investors, measured in terms of the balance sheet total, seven times as large as firms are bought by investors from other countries. The debt ratio in the former, 6.5 percentage points higher, the average profitability at the time of the Takeover is close to zero, while other investors focus on companies with positive income.
Chinese state-owned enterprises takeover targets, prefer in the field of raw material extraction and the agricultural sector. Chinese private companies are more likely to buy companies in the field of electrical industry, mechanical engineering and the automotive industry. In the Latter case, Chinese state-owned enterprises, however, are also active.
because Of other investors
highway in Hami, Shuttle to the new silk road
The fact that Chinese investors shopping cheaper, speaks against the widespread Thesis that Chinese companies with government subsidies to outbid the other investors in a systematic and from the market.
“Chinese investors seem to have more emphasis on size instead of profitability and avoid competition with other bidders,” explains Ifo President Fuest. The preference for higher leveraged company with lower profitability could also be used with a longer-term investment horizon or better financing from state-owned Chinese banks explains.
“In the study, it is also visible that Chinese state-owned enterprises to implement the strategic economic policy of the government in the act, in particular, the ‘New silk road’ and ‘Made in China 2025’,” said Fuest.
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source: boerse.ard.de
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