NY, USA -The Wall Street Journal, by Henny Sender, June 23 2005
Four years ago, Goldman Sachs & Co. was trying to help PetroChina Co. Ltd., China's energy company, to buy assets of Devon Energy Corp. in Indonesia . "At that time, nobody thought we were serious," recalls Johan Levin, a director of mergers and acquisitions at Goldman Sachs in Hong Kong. Today, by contrast, "the first in any list of buyers are Chinese."
Following the revelation in the last week of the proposed purchase by Chinese companies to two U.S. companies, one in the manufacturing sector and another in the energy, now all see China's interest as something serious. And, although it may note similarities in tenders with the wave of Japanese purchases in the eighties, China's incursion by U.S. business assets and other parts of the world will be much more substantial and sophisticated.
The Chinese corporations seeking natural resources, manufacturing techniques, brands, distribution, and technology has a significant advantage: The mass access to cheap credit lines to local banks, especially the China Development Bank. Funding is not a problem.
"There are a lot of money available in China," says Fred Hu, managing director of Goldman Sachs in Hong Kong and Beijing. "No Ex-Im Bank only or Bank of Development. All commercial banks in China have a great capacity to fund businesses and are very interested in providing support to strengthen its own influence. "And it is clear that any revaluation of China's currency against the dollar would make U.S. assets even cheaper in local terms .
the late 80's, the Japanese buying spree in the U.S. quickly became a contentious issue between the two countries. But Chinese companies, recognizing his own weakness, are seeking assistance of some of the key participants sophisticated market, many of them based in the U.S. A group of Chinese companies, for example, are turning to private equity funds Texas Pacific Group, Bain Capital and Blackstone Group, to assist them to acquire as much to keep their prey.
For Wall Street, the attempt to Qingdao Haier to buy Maytag Corp., and CNOOC bid for Unocal Corp. Ltd. represent only the beginning of a wave of business in China. Huawei Technologies Co., maker of telecommunications equipment, is considering launching a bid for the ailing Marconi Corp., the United Kingdom of GB. Shanghai Automotive Industry Corp., considered the Chinese leader in car production, after buying the Korean Sanyong Motor, which specializes in SUVs and limousines may be interested in buying other automakers Specialized in Italy and Germany to strengthen the local and international market. Citic Resources, armed with a check for almost $ 1,000 million from the Development Bank of China, attempts to acquire control of Thai Petrochemical TPI. Aluminum Corp. of China Ltd., in turn, has a credit line of U.S. $ 1,000 million from the Export-Import Bank of China to buy assets and companies in the aluminum sector.
Business India, with less capital than their counterparts in China, but with powerful allies, following the same path. Indian manufacturing companies become interested, or to purchase assets from U.S. textile companies weakened, in the case of Wespun India Ltd., a Spain bus manufacturer, Tata Motor's recent white.
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