Alike in the global market, Chinese companies are rising to big player in Korean M&A market. (image: MyTudut/flickr)
SEOUL, July 30 (Korea Bizwire) — When President Xi Jinping of China visited South Korea earlier this month, around 200 business delegates, including CEOs of major Chinese IT companies like Alibaba, Baidu, Huawei and China Telecom, accompanied him on the trip.
All of the Chinese companies are reportedly, gearing up to push deeper into Korean market with big investment, and their visit reinforced the fact that China is not the “world’s factory” anymore but increasingly a “major player” in the world’s investment sector.
As is the case with the world’s M&A market, Chinese companies — armed with their huge cash pile, are emerging as a big player in Korea’s takeover market. According to the statistics from Bloomberg, during the first half of this year, the combined sum Chinese companies spent to acquire five Korean companies was US$ 661 million, a whopping 2,796 percent increase over the same period of the previous year when the volume stood at US$23.6 million with buying three Korean companies.
The marked rise of Chinese investment in Korean M&A market was prompted by Tencent’ s US$ 500 million investment into CJ Games, Seoul-based major game distributor. The China’s IT giant secured 29 percent share of the Korean game company.
Chinese companies are pouring the colossal sum of money into Korea as Asia’s fourth biggest economy rises as a new investment target with the Chinese real estate market faltering, previously the largest investment destination in China. Chinese companies are, especially, eyeing Korea’s entertainment and leisure industries as lucrative sectors reckoning that Chinese tourists into Korea continue to rise.
Market analysts expect the volume of corporate M&A market in Korea will expand further. An official at the local investment bank industry said, “Chinese companies are eyeing Korean IT companies since they have an edge; Tourism industries like hotels and casinos aimed at Chinese tourists are also on the target.”
Meanwhile, Chinese companies’ M&A investment in the global market recorded a total of US$43.9 billion (250 cases) this year, 36 percent rise over the same period of the previous year with US$32.3 billion (171 cases).
By John Choi (johnchoi@koreabizwire.com) and M.H. Lee (mhlee@koreabizwire.com)
