The Ministry of Commerce has reported that in 2009, China’s outbound investments in the non-financial sector reached US$43.3 billion, accounting for a 6.5 percent increase from 2008. Of all the outbound investment, mergers and acquisitions (M&A) transactions account for 40.5 percent. In the natural resources area (mainly petroleum, natural gas, and ferrous metals), China’s total outbound investment in 2008 was US$5.82 billion. In 2009, a single outbound investment in natural resources — acquisition by China Petroleum and Chemical Corporation, or Sinopec, of Addax Petroleum Corporation — had a deal value of C$10.3 billion (approximately US$8.8 billion).

While the prospect of outbound investment becomes more positive, companies should not overlook the complexity in successfully concluding an outbound investment. The key factors in every M&A transaction, such as adequate due diligence, management integration, labor and contract management, intellectual property rights, and corporate governance all become more complex in a cross-cultural context. Read the entire article here.