Cash-rich corporate China is increasingly eyeing international buyouts to go global, but experts say mainland enterprises face hurdles.
At the 17th National People's Congress executives of several mainland lenders expressed eagerness to expand in developed markets such as the United States, by acquiring stakes in or forming partnerships with financial institutions.
Glenn Maguire, Societe Generale chief economist for Asia Pacific, said mainland firms have the financial resources to bid for big companies in the United States or Japan. But they face regulatory hurdles, especially if their targets are in strategic sectors.
"I don't think the transparency and corporate governance in China at this stage is sufficient that authorities in the United States, Japan or other developed economies would seriously countenance Chinese banks taking over one of their financial institutions," he said.
Protectionist sentiment in these economies is also an obstacle. "The situation in China is similar to Japan in the 1980s: a booming trade surplus coupled with the perception that China is keeping its currency artificially low," Maguire said.
"There was considerable resistance to Japanese corporations buying stakes in the United States."
Bruce Wang, director of Mergers and Acquisitions, Greater China at Mercer, said firms also need to be aware of cultural differences between them and their takeover targets.
He cited the joint venture between Guangdong television maker TCL Corp and France-based Thomson as a deal gone sour because of rushing in without understanding critical issues during due diligence. Wang's colleague Elisa Hukins said "If the cultural issue is not managed well enough, it can take years before the companies can generate value."
