A New Stage for Overseas Expansion of China's Equipment Manufacturing Industry

Benefiting from the accelerated urbanization of China and the rapid and constant increase of fixed asset investments, China’s Equipment Manufacturing Industry has taken on an explosive growth in the past three years. However, since 2011, there was an exacerbated economic downturn across the globe and China has also faced with a slower economic growth. The sharp drop of market demand pulled over the performance of the whole industry. The development model of denotative expansion can no longer conceal the weakness of China’s Equipment Manufacturing Industry, e.g. shortage of technology and poor independent innovation ability. The industry has entered into a key period of industrial transformation and upgrading. Many enterprises have tried to improve their technology by overseas acquisitions in recent years.

To learn more about development trends of overseas M&As in the Chinese Equipment Manufacturing Industry, and explore the critical factors that influence M&A activities, Deloitte China's Manufacturing Group and Deloitte China Research and Insight Center (CRIC) jointly conducted an in-depth study on the overseas expansion strategy and the performance of China’s Equipment Manufacturing Industry.

Key findings indicated the following:

• The overseas expansion of China’s Manufacturing Industry has entered into a new stage headed by Equipment Manufacturing Industry.
• PE funds play an active role in overseas M&A deals in Equipment Manufacturing Industry.
• A major demand for overseas M&As by Chinese equipment manufacturers is to obtain technology, and China is still their dominant sales market.
• The main targets of overseas M&As by Chinese equipment manufacturers are assets in Germany and the United States.
• The distrust and incomprehension by sellers to Chinese enterprises is the biggest obstacle faced by Chinese equipment manufacturing enterprises that intend to acquire overseas assets.
• A successful outbound acquisition is based on rapid and precise post-deal determination of target market and integration priorities.