China Inc's on the prowl worldwide

It appears Midea has done its math. It is a trait not uncommon among Chinese companies shopping for overseas brands, businesses and properties.

For instance, earlier this month, an investment company Australian Rural Capital informed the stock exchange concerned that it is partnering with China's Shanghai Pengxin Group to buy S. Kidman & Co.

Kidman is Australia's largest private landholder with properties covering 101,000 square kilometers in Western Australia, South Australia, the Northern Territory and Queensland. And in January, China's Haier agreed to buy US General Electric's home appliances business for $5.4 billion in cash.

Chinese aviation and shipping conglomerate HNA Group has plans to buy Ingram Micro Inc, which distributes products ranging from Apple Inc's iPhones to Cisco's network equipment, for about $6 billion.

Evidently, overseas M&A deals abound, so much so that the Ministry of Commerce spokesman Shen Danyang informed media recently that net capital flows have reversed. Since 2014, more capital has gone out of China chasing foreign assets than has come in.

"The trend will continue," he said. This year, Chinese investment overseas will likely exceed that of foreign investment in China.

Lu Jinyong, a professor at the University of International Business and Economics, Beijing, said last year the Chinese mainland's investment overseas ranked third at $130 billion, behind Hong Kong's $165 billion and the United States' $384 billion.

According to The Boston Consulting Group's September 2015 report "Gearing Up for the New Era of China's Outbound M&A", the motivations for such deals are changing.

Only 20 percent of such deals made during the last five years had the goal of acquiring strategic resources. About 75 percent were aimed at accessing technology, brand and market share.

However, the report showed that challenges follow M&A deals. For example, in 2014, Chinese companies signed 154 outbound M&A deals valued at $26.1 billion. But only 67 percent of them were eventually completed. This rate is much lower than that of European, Japanese and US companies involved in similar M&A deals.

BCG's report said flawed, unclear M&A strategies and ineffective deal management have caused many outbound M&A deals of Chinese companies to fail. "Good deals require clear strategy, effective implementation and relevant capabilities," said the report.

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