After several months of silence as they were targeted for a series of anti-graft investigations, I’m happy to see that western firms are finally speaking out about the biased nature of this Chinese campaign against them. The firms are voicing their grievance through an industry organization, the European Union Chamber of Commerce, which is complaining that western drug makers have been unfairly targeted in the campaign that began around 2 months ago and has netted such big names as Britain’s GlaxoSmithKline (GSK) (London: GSK), Switzerland’s Novartis (Switzerland: NOVN) and French drug maker Sanofi (SAN). At the same time, the United Nations is adding its voice to the debate, saying this kind of anti-corruption campaign should be a welcome step to cleaning up the country’s business environment. Read Full Post…
China’s oil and resource companies have been on a buying binge over the last year, snapping up global assets at what look like relative bargains from cash-strapped global companies under pressure to raise money. Beijing has been paying the bills for most of the purchases so far, but the latest announcement from oil refining giant Sinopec (HKEx: 386; Shanghai: 600028; NYSE: SNP) indicates that China may be testing the waters to see if investors are willing to help pay some of the bill in this global buying binge. If that’s the case, Beijing may soon face some major resistance from its major resource companies’ shareholders, who are likely to question whether Sinopec and other Chinese resource firms are getting good value for their money.
New reports from Down Under are saying that China’s leading power distributor State Grid Corp has made a major purchase in Australia, a move that initially looks controversial but could actually mark the start of a smarter approach by Chinese firms to global M&A in the sensitive resource and energy sectors. State Grid, which has been on a global buying spree over the last year, has announced it is acquiring 41 percent of ElectraNet, a grid operator in the Australian state of Queensland, from a local government entity. (
A couple of major overseas moves are in the headlines today, spotlighting the fact that Chinese firms are becoming increasingly adept at relatively simple resource deals, even as they still lack sophistication to do M&A in other, more complex sectors. In the former category, oil major PetroChina (HKEx: 857; Shanghai: 601857; NYSE: PTR) has reached a deal to co-develop a $3 billion oil pipeline in Canada with a local partner, in the largest project of its kind by a Chinese firm to date. In the latter, a white-knight rescue bid by a relatively obscure Chinese firm for bankrupt plane maker Hawker Beechcraft has collapsed, leaving the US company no choice but to work out a reorganization plan with its creditors.
Despite Beijing’s repeated efforts to stamp out piracy, the problem remains a major one in China, with companies large and small, public and private still engaging in a practice that costs software makers billions of dollars in lost sales each year. The magnitude of the problem was on prominent display last week when reports emerged that Microsoft was seeking Beijing’s help to get four major companies, including the parent of PetroChina (HKEx: 857; Shanghai: 601857; NYSE: PTR), to stop using pirated copies of its popular Office software suite.
In what looks like a brilliant tactical move, oil major CNOOC (HKEx: 883; NYSE: CEO) has just issued a massive new invitation for foreign companies to help it develop oil fields off the China coast, a move that should help both the company and Beijing to advance some of their most recent initiatives. In CNOOC’s case, the latest offering of 26 offshore blocks for co-development could help to show that it isn’t only interested in buying assets in other countries but is also prepared to offer assets in its home China market to foreign oil majors. On a more geopolitical level, the offering of so many new blocks for development is likely to send the signal that China wants to move aggressively to settle some of the noisy territorial disputes with many of its Asian neighbors, many of which involve disputed islands in ocean areas that could contain valuable new oil deposits.
