Reuters/Beijing
China said yesterday its policy toward foreign acquisitions of domestic firms was fair, explaining that broader national concerns take precedence over the potential benefits to any single company.
The comments come as protectionist tendencies around the world are rising with Beijing at the centre of anti-dumping accusations from firms in the West that view Chinese competition as unfair.
“We want to actively encourage mergers and acquisitions,” Jiang Yaoping, a deputy economic minister, told a conference.
“But not to maximise the benefits of one particular company,” he said. “The concerns of the wider public and the country are more important.”
Regulators rejected in March a $2.4bn bid by Coca-Cola for China’s top juice maker, Huiyuan Juice, blocking what would have been the largest-ever takeover of a Chinese company by a foreign rival.
The ruling by Jiang’s ministry that the merger would have been bad for competition fanned fears that Beijing would not focus on narrow market-concentration grounds but rather on the basis of China’s national economic development.
Coca-Cola is not alone in wanting to increase its investment in China, the world’s third largest economy and still one of its fastest growing.
ArcelorMittal, the world’s largest steelmaker, has long desired to take management control of a Chinese firm, but has been thwarted by government restrictions.
“We would like to have a majority share holding,” Roland Verstappen, a vice president at ArcelorMittal, said on the sidelines of the same conference in Beijing. “Give us control. We want to do more.”
ArcelorMittal owns one-third of mid-sized Chinese steel maker Valin Steel Tube & Wire Co and has a stake in Hong Kong-listed China Oriental Group Co.
The steel giant announced earlier this year it was forming a $951mn 50/50 joint venture with the parent of its Chinese partner, Hunan Valin Iron and Steel Group.
Other executives at the conference said mainland firms would meet obstacles when investing overseas if China did not open its economy wider to foreign investment.
“Investment policy must be reciprocal,” said Yang Xiangdong, the managing director of US private equity giant Carlyle Group’s Asia buyout fund. “It is not reasonable to expect overseas markets to allow your investments if you don’t open your market to them,” he said.
Carlyle last year, after three years of talks, walked away from a $375mn plan to buy Xugong, China’s biggest construction equipment maker, after a campaign to keep the firm in Chinese hands stiffened regulator’s opposition.
China’s huge state-owned firms have also found themselves at the wrong end of political tug of wars.
Fears of Chinese government ties threatened the planned $19.5bn tie-up between Australian miner Rio Tinto Ltd and state-owned aluminium firm ChinalCo
Rio opted last month for a joint venture with rival and compatriot BHP Billiton.
Fears that the Chinese government controlled state-owned firms were unfounded, said the head of China’s powerful State-owned Asset Supervision and Administration Commission (SASAC).
“It doesn’t make any sense,” Li Rongrong told the conference. “The assets of many state-owned firms are listed, just like US companies are listed.”
However, Li seemed to accept that China needed to do more to allay those fears, saying “We need to do a better job.”
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