Chinese manufacturers have a growing appetite for foreign mid-cap companies that own distribution channels to help them ease overcapacity, private equity experts said.
Japan and the United States are the favored destinations for this kind of investment, they said.
“With overcapacity in China and the need to increase competitiveness, Chinese companies are interested in acquiring foreign companies that have technology, distribution channels and brands,” Gao Zhen, managing partner of Mandarin Capital Partners, told the 26th annual AVCJ private equity forum Thursday.
Industries in the United States and Japan are particularly attractive while medium-sized companies in Germany and Italy are appealing due to their technology and machinery that have the potential to lower labor costs.
Also, Chinese investors are drawn to Italian brands to cater to an emerging well-educated, sophisticated domestic market.
James Zheng, managing director of Fosun Capital Group, which has invested in Alibaba’s small and micro loan unit and logistics business Cainiao, said the company will target companies with the most technological impact.
Zheng said Fosun is waiting in the wings amid a government crackdown on extravagance that could yield acquisition opportunities
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