Chinese firms likely to boost M&A activity in response to Trump threats: analysts

Chinese companies are gearing up for a potential increase in merger and acquisition (M&A) activity in response to President-elect Donald Trump’s tariff threats. As the possibility of 60 to 100 percent tariffs on Chinese goods looms, businesses in China are looking to diversify away from the US market. This comes at a time when the global M&A environment is facing challenges like high interest rates and geopolitical tensions.

Industry experts predict that the escalation of tariffs could actually accelerate the globalization of Chinese companies. Stanley Lah, Asia-Pacific and China M&A services leader at Deloitte, notes that Chinese firms may expedite their search for alternatives in shipping and selling to the US. This could lead to an increase in outbound M&A deals as companies seek to become more effective in the global market.

While Chinese outbound M&A deals have seen a decline of 16.5 percent this year compared to last year, there are signs of a rebound, especially in sectors favored by Beijing. Federico Bazzoni, CEO of investment banking at Vantage Capital Markets, highlights that certain industries like manufacturing, technology, new energy, and consumer products are witnessing increased activity. Additionally, valuations are becoming more attractive in these sectors, making them appealing targets for Chinese companies.

Overall, the threat of tariffs imposed by the US is spurring Chinese firms to explore new avenues for growth and expansion through M&A activity. This trend is expected to continue as companies seek to navigate the changing global economic landscape.