ChinaMerger Landed in Times Square: Are China and the US Entering a Great Era of Economic Partnership?

SHANGHAI, Sept. 25, 2015 /PRNewswire/ -- Today, the Reuters screen in Times Square a creative advertisement relating to a Chinese company, ChinaMerger, was displayed.

A website called ChinaMerger (www.chinamerger.com) chose a subtle topic: China's enhanced investments in the U.S.

Two days ago, a large science and technology forum was held in Seattle. 15 top Chinese entrepreneurs had a constructive dialogue with 15 prominent CEOs from America.

In the lead role are not the traditional­, giant State-owned businesses, but thre­e private Internet companies: Baidu, Ali­baba Group and Tencent - currently three of ­the hottest "star" enterprises in China. This is actually the first time for these three entrepreneurs to visit another country following the President of China.

Baidu and Alibaba are both US listed companies. Another reason why the three B.A.T. companies (Baidu, Alibaba, Tencent) are so well-known is they have made 30 investments totaling USD 6.871 billion worldwide in the past 19 months, half of which were in the US.

In 2002, China's outward foreign direct investment was only USD2.7 billion. In 2014, China's official outward foreign direct investment (OFDI) was over USD140 billion, and for the first time in history, inward foreign direct investment (IFDI) totaled more than USD120 billion.

In addition to the increase in the total investment amount, the drastic change in the investment structure deserves even more attention. According to statistics by Morning Whistle - the company who launched ChinaMerger, Chinese enterprises made at least 331 outward mergers and acquisitions ("M&As") last year, totaling more than USD 94.1 billion. Among them, 237 were made by private enterprises, accounting for 71.60%.

In the past, China's outward investments were mainly in the mining and energy sector in Africa and Latin America. But in recent years, Chinese capital has been more invested in the sci-tech, medical, consumables, culture and entertainment areas of developed countries in Europe and America. 

According to statistics of Morning Whistle, from January to July this year, Chinese enterprises made 72 M&As in the U.S., increasing by 105.71% year-on-year; the disclosed M&A value totaled USD 31.971 billion, up by 422.49% year-on-year -- hitting a historic record. TMT, finance and real estate were the top three popular sectors.

In the past, the Chinese investors often left an impression to their local U.S. partners: they would soon close the factories in U.S. and move their production lines back to China, because the costs in China were amazingly low. But now, Chinese companies' investment strategies have significantly changed: they seldom shut down their businesses in U.S., instead, most will make additional investments and employ more locals. 

According to the data published by the Bureau of Economic Analysis under the U.S. Department of Commerce, Chinese enterprises in the US hardly employed any Americans in 2000, but now their staff in U.S. exceeds 80,000 in 2015.

These significant changes have gradually improved the Americans' previous attitude towards Chinese investments. However such cooperation is still faced with a wide gap - the significant information asymmetry between the two countries.

Morning Whistle is working to eliminate such information asymmetry between Chinese and U.S. enterprises through the Internet.

As a core product of Morning Whistle, ChinaMerger functions as a global property exchange place, similar to Alibaba but in a brand new era.

Over the past 15 years, China has significantly increased its commodity export to the world after the WTO entry. At Alibaba's early stage, its primary business model was to display the commodity information in China to buyers around the world.

The next 15 years will be characterized by China's capital export. Morning Whistle is building and providing the information of tradable assets and equities around the globe on chinamerger.com to hundreds of thousands of Chinese investors.

Facts have proved that their creative vision to build this platform is being recognized by the market.

Chinamerger.com was launched on September 1, 2014. In just one year, this platform has established cooperation relationships with about 2,000 sellers and agencies across the globe. Among them are the investment promotion authorities of many countries and a large bunch of high-profile investment banks, law offices and private equity firms.

"Our platform has a very professional project information collection and publication mechanism. To prove this, let's just look at the results. As you know, lawyers maybe the most rigorous people on Earth. Now, hundreds of law firms across the world have recognized our service model," said Alex Wang.

Currently, Morning Whistle is the one and only such platform in this field - connecting global sellers and a colossal number of Chinese buyers.

By September 25, over 2,000 global sellers have been strictly verified by ChinaMerger, and nearly 2,400 selected Chinese buyers have gone through the same rigorous procedures. Buyers on this platform are mainly large Chinese private enterprises. These 2,400 buyers include nearly all of the well-known Chinese investment firms: Fosun, Wanda, Legend Holdings, China Min sheng Investment Co., Ltd. and New Hope. 

Just take this as an example: U.S. companies now looking for investors in China often first turn to Fosun Group led by Mr. Guo Guangchang, who is referred to as "China's Warren Buffett." However, as a giant conglomerate, there are at least 9 huge platforms and over 33 small platforms in Fosun Group engaging in overseas investments. And each platform specializes and prefers different fields. Such complexity raises a big question: who can rationalize the complex relationships and identify the most suitable key person? The answer should be: Morning Whistle.

However, instead of the large transactions, the core market ChinaMerger really focuses on is the small and medium-sized M&As market, with the transaction value ranging from USD 10 million to USD 100 million. 

The database of chinamerger.com is connected to tens of thousands of Chinese enterprises, each with a sales volume over RMB 500 million and net asset value of more than RMB 200 million.

"Our real mission is not to help those big guys make more money, but to help a great many Chinese small and medium-sized manufacturers to find a practicable restructuring and upgrading path," said Alex Wang.

The most exciting thing recently to Alex is that a town chief of Guangdong Province flew to Shanghai to talk with him. He told Alex that about 6,000 manufacturers in his town want to upgrade and cooperate with overseas enterprises with brand and technology advantages. 

"But they do not know how to go overseas. Some traditional investment banks charge high fees even at the very preliminary stage, which is also not acceptable for them," Alex said. The town chief was vexed by such predicament. 

"The very thing that we are most willing to do is to leverage the internet to provide low-cost and effective solutions that can help those who want to work with the Chinese counterparts," added Alex, "It should be emphasized that our online matching services are currently free of charge."   

Photo - http://photos.prnewswire.com/prnh/20150924/270387

SOURCE China Merger

Related Links

http://www.chinamerger.com