China Inc. & Billionaires Dodge Capital Controls via Global Buyout Binge. Government Not Amused
The fear of further yuan devaluation.
Chinese companies, consortia, and investment funds representing the wealthiest individuals have been splurging, with the encouragement of their government, on acquisitions and investments overseas. But now the government, which has long been trying to crack down on smaller forms of capital flight, is getting nervous about these deals. The yuan is diving, foreign exchange reserves are dwindling, the debt-burdened economy is facing breath-taking risks, and it’s time to crack down on the big league of capital flight.
So far this year, Chinese buyers have announced $213 billion of acquisitions in other countries. The biggest of them is the $43-billion acquisition of Swiss-based Syngenta by China National Chemical Corp.
Anbang Insurance Group rose from obscurity to make a slew of real estate and hotel deals in the US and Canada, including the $6.5 billion acquisition of Strategic Hotels & Resorts in the US.
A consortium, Sino-Europe Sports Investment Management Changxing, has been trying to buy Italian soccer club AC Milan from Silvio Berlusconi for $825 million. The deal is hung up due to an allegedly forged bank document and other issues.
Dalian Wanda Group, the main holding company of Chinese billionaire Wang Jianlin, spent $1 billion to acquire Dick Clark Productions which owns numerous annual TV shows, such as the Golden Globe Awards, the American Music Awards, and the Billboard Music Awards. Earlier in 2016, Wanda had acquired a majority stake in Hollywood studio Legendary for more than $3 billion.
Midea, a Chinese maker of heating, ventilation, and air conditioning systems, is trying to acquire German robotics specialist, Kuka, for €3 billion, against considerable political resistance in Germany.
Another Chinese investment group, this one controlled by Zhendong Liu, a Chinese businessman, is trying to acquire Aixtron, a German maker of semiconductor equipment used in LED lighting, for about €670 million, which has caused some hissy-fits at the US Committee on Foreign Investment for security reasons.
A Chinese investor group, according to Reuters’ sources, is in talks to buy privately held International Data Group, a technology publishing company with hundreds of tech websites and magazines, including PCWorld and market research firm IDC. The company has put itself up for sale earlier this year at a valuation of $500 million to $1 billion. The investor group is headed by Hugo Shong, chairman of IDG of Greater China.