Has nothing been learnt from the Unocal fiasco?

Three years after its humiliating defeat in the bid for US oil company Unocal Corp, China Inc is once again in buying mode. The target this time is a stake in a leading resource company, Rio Tinto Group, the price tag is US$19.5 billion and the buyer is Aluminum Corp of China (Chinalco), a government-owned entity.

We don't doubt Beijing's determination to gain control over natural resources for the country's economic expansion. The earlier proposal by BHP Billiton, the world's largest mining firm, to merge with Rio, though later withdrawn, definitely sent a chill up the spine of central government officials.

The question is how successful Chinalco's investment will be. Some clues might be drawn from a comparison of the bids for Unocal and Rio.

Politics is always the first factor to consider when the targeted asset is raw materials and the buyer is China.

The Unocal bid was killed by political opposition. The US Congress passed legislation to drag out the regulatory approval process. It happened at the peak of anti-China hysteria in Washington - fuelled by the supposed job losses to the mainland, a growing Sino-US trade deficit and the alleged undervaluation of the yuan.

On the surface, the political environment is different this time. The decision is with the British and Australian authorities, who are far less hostile towards Beijing than the Americans. The financial crisis has also shaken the claims of the west to economic superiority and the moral high ground.