KPMG report: China's most visited companies intend to invest abroad

According to a recent study by KPMG China, more than 84% of the respondents said they would invest more in foreign investment, and that mergers and acquisitions would be the main means for future Chinese companies to invest overseas. The global financial crisis has failed to stop Chinese companies from moving overseas, and China has jumped into the world's fifth-largest foreign investment country in 2009. But executives at Chinese companies are also aware of the short boards they face in overseas mergers and acquisitions. Tao, a partner at KPMG's China Investment and restructuring advisory service, said that Chinese executives, for example, consider themselves relatively weak in screening investment projects or negotiating deals.　　More than half of the respondents came from the northern part of China, where private enterprises accounted for 1/4. A survey of KPMG's recent "world-class dream: the status and reflection of foreign investment in Chinese companies" said that 60% per cent of respondents said that "not having clear investment strategies and objectives" could lead to the worst mistakes companies make when investing abroad. While 48% of companies say they may embark on a majority-equity merger, investment in minority stakes or greenfield Investments has become a trend in the past year after big projects have been hit by strong resistance in the countries of destination.　　Asia remains the hottest region for foreign investment by Chinese companies, with 67% of respondents opting for the region, while Europe and the US are more popular with big companies.　　Although 57% of the companies surveyed have recognized the importance of establishing in-house teams dedicated to screening investment targets, and many Chinese companies do set up specialized strategic teams to screen targets, but they are limited in their ability to identify investment targets that are "aligned with the firm's own strategic objectives and closely linked to basic business". "Lack of negotiation skills and execution capacity" is a worry for many respondents. Consolidation after mergers and acquisitions is still the biggest problem.　　53% per cent of respondents who had been involved in mergers and acquisitions were involved in management and integration after the 3 months before the transaction was completed, and 20% even took that time up to 6 months before the deal was completed. Of those companies that have invested in foreign investment, 49% recognize the role of intermediaries, and only 33% of companies that do not have foreign investment projects endorse this. 27% per cent of respondents considered "reliance on incompetent intermediaries" as one of the reasons for the failure to achieve value. So the client company "manages" rather than "relies" on the consulting team and sets reasonable expectations for their performance.