FOLLOWING a tide of flotations of Chinese stocks overseas, analysts believe mergers and acquisitions should emerge as the next market in China for the foreign financial community.
Alfred Shum, Ernst & Young's executive partner for China operations, said the sheer size and number of China's state-owned enterprises meant there was a huge untapped market for merger and acquisition-related services.
As China tried to build a modern corporate system, it was inevitable that many conglomerates would emerge and at the same time other smaller entities would be restructured.
''There are more than 100,000 state-owned enterprises in China, and many of the less efficient would be the targets of merger and acquisition bids,'' Mr Shum said.
As corporatisation in China was carefully controlled by the Government, the process in China would prove more successful than the dramatic privatisation that was under way in eastern Europe.
Mergers and acquisitions among listed companies in China were not expected to develop rapidly - a Shenzhen company was fined by the regulatory authorities during its bid to take over the control of a Shanghai firm last year.