In the News                                                                                                        

Feb. 13, 2007 "China Is Flooded by Venture Capital" (WSJ) - Venture-capital investment flooded into Chinese companies in 2006, rising 55% from the previous year, with more-mature start-up companies attracting money like never before.

Investors placed $1.89 billion across 214 deals last year, compared with $1.22 billion and 156 deals in 2005, according to a report from Dow Jones VentureOne and Ernst & Young LLC.

Jan. 25, 2007 "Sizzling Growth Challenges China" (WSJ) - China's economy continued to beat expectations in 2006, expanding faster than forecast in the fourth quarter and recording full-year growth of 10.7%, the quickest annual pace since 1995, the government said. Many economists revised their forecasts for 2007 upward after Thursday's data.

Jan. 25, 2007 "China Close to Ending Global Firms' Tax Break" (WSJ) - According to a draft of the proposed "Enterprise Income Tax Law" that has been circulating among businesses in recent weeks, the tax rate for foreign and domestic companies will be set at 25%, and most existing tax holidays will be phased out over five years. Currently, the corporate-income tax rate is 33%, but local governments and development zones have often offered foreign companies rates as low as 15% to set up in their jurisdictions.

Since the 1980s, China has offered reduced tax rates to woo foreign investors. These days it is having little trouble persuading them to set up shop or expand, thanks to the country's powerful export-manufacturing base and its robust economic growth -- which officials on Thursday said registered at 10.7% for 2006, surpassing 10% for the fourth straight year. Last year alone, Beijing says foreign companies poured $69.5 billion into Chinese operations.

Jan. 24, 2007 Record Year for Global M&A (Knowledge@Wharton) - 2006 set a record for mergers and acquisition worldwide. Deals totaled $3.79 trillion, 38% higher than in 2005, and 55 of the tractions were valued at more than $10 billion each, according to data from Thomsom Financial. Europe had 39% more deals than in 2005 for a total of $1.43 trillion. US came in at $1.56 trillion for 36% growth. Private equity firms were major movers in the trend, responsible for 20% of global M&As and 27% in the U.S.

Jan. 13, 2007 "Merger Mania Strikes China" (WSJ) - China had a surge in mergers and acquisitions in 2006 and the boom will likely continue in 2007. According to Dealogic, a total of 2,263 whole or partial acquisitions of China-based companies were announced last year, up from 1,786 in 2005. The total value of the deals reached $103.8 billon, up 68% from $61.8 billion in 2005.

The M&A trend is broad based, and has been attributed to the rising stock market, robust corporate earnings and government encouragement that alll converged to favor consolidation. For example, China's cement companies are trying to consolidate into regional powerhouses from scattered small producers. Foreign companies are also getting into the game. Many companies who weren't sellers are feeling the pressure as competitions in marketplace heat up when rivals consolidate, achieving economy of scale, gaining ability to wipe out competitors and strengthening pricing power.

Recent News

Asian buyout market attracts U.S. law firm (Bloomberg News)

Management buyout allowed in major China's SOEs (Xinhua)