Wednesday, July 25, 2018

China's New Acquisition Strategy?

To gain control of an important foreign asset, does China try to appease a foreign country by offering to establish its mainly symbolic company headquarters there? At least two recent cases raise this question.

Before Broadcom acquired the New York-based chipmaker, CA Technologies, suspicious Chinese connections of Broadcom's CEO, Hack Tan, helped prevent a takeover of major US chipmaker, Qualcomm. Besides becoming chummy with President Trump prior to the failed purchase of Qualcomm, Hack Tan had moved Broadcom's headquarters from Singapore to San Jose, California, close to Qualcomm's headquarters in San Diego, CA. (Caught up in tariff and trade adjustments between the U.S. and China, Qualcomm failed to receive approval from Chinese regulators for its acquisition of Dutch rival, the NXP semiconductor company, and terminated its two-year effort in July, 2018.)

Before its failed bid to acquire Portugal's largest utility company, state-owned China Three Gorges, which already owns a 23% share in EDP (Energias de Portugal), offered to keep EDP's headquarters in Lisbon.

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