The deadly coronavirus outbreak, which first appeared in China in late December, and the country's subsequent isolation have effectively reversed China's early, tentative steps into the broader global tech M&A market. Buyers there had regularly (if not voluminously) used acquisitions as a means of geographic expansion or as a way to profitably arbitrage their low cost of labor compared with other countries.
Yet for 2020, the single non-domestic tech purchase by a China-based acquirer in the first 10 weeks of the year puts full-year 2020 on pace for the fewest foreign tech deals in more than a decade and a half. Further, our data shows that 2020 is tracking to just one-tenth the number of foreign tech transactions in 2016, which stands as the peak year for Chinese businesses shopping abroad.
Several of the prints listed in the M&A KnowledgeBase from 2016's M&A heyday show just how aggressive some of the Chinese buyers had become. Prints from 2016 included deals such as Didi Chuxing's $6bn reach for Uber's operations in China as well as multibillion-dollar buyouts by Chinese financial operators of Ingram Micro and Lexmark. That year proved to be the high-water mark, with the waters receding every single year since then.
The notable drop-off following 2016's record year was largely due to Beijing's abrupt introduction of restrictions on foreign investment. The currency controls were followed up by a hugely damaging trade war between the US and China, which had only partially been resolved before the outbreak of the coronavirus. Now, with China as Ground Zero for the epidemic, acquirers there face yet another barrier to shopping outside their home market.
Brenon Daly oversees the financial analysis of 451 Research's Market Insight and KnowledgeBase products, having covered more than a quarter-trillion dollars' worth of deal flow for both national publications and research firms.
Sheryl Kingstone leads 451 Research’s coverage for Customer Experience & Commerce, which covers the many aspects of how customer experience is a catalyst for digital transformation. She oversees the company’s coverage of a variety of customer experience software markets spanning ad tech, marketing, sales, commerce and service.
Keith Dawson is a principal analyst in 451 Research's Customer Experience & Commerce practice, primarily covering marketing technology. Keith has been covering the intersection of communications and enterprise software for 25 years, mainly looking at how to influence and optimize the customer experience.