Chinese enterprises scale back mergers and acquisitions in face of Beijing’s tighter scrutiny, survey finds

The merger and acquisition (M&A) frenzy among Chinese enterprises is cooling off in the face of Beijing’s tightened scrutiny of outbound investment, a new survey has found.

About 44 per cent of Chinese respondents said they have more than five M&A deals in progress, sharply down from 90 per cent in a similar survey half a year ago, professional services firm EY said on Wednesday.

China’s tighter scrutiny on outbound mergers and acquisitions and capital outflows since late last year has made enterprises more rational when it comes to making deals, leading to a sharp drop that bucks the global trend, said Shanghai-based Erica Su, EY’s managing partner, transaction advisory services for Greater China.

The findings were based on replies from 154 executives from mainland China, who were among a total of 2,300 executives from 43 countries who participated in the survey between March and April.

Though cooling off, the M&A intentions of Chinese enterprises were still at an elevated level, EY said.

Still, 89 per cent of Chinese firms said they have on average more than three deals in process, compared with 98 per cent saying the same six months ago.