CHINA Law and Practice Contributed by: Wei Chen, Yue Zhang, Hao Peng and Yi Sun, JunHe LLP
JunHe LLP 20/F, China Resources Building 8 Jianguomenbei Avenue Beijing 100005 China Tel: +86 10 8519 1300 Fax: +86 10 8519 1350 Email: chenwei@junhe.com Web: www.junhe.com
1. Market Trends 1.1 Technology M&A Market
1.2 Key Trends Horizontal Consolidation
Due to the slower than expected economic recovery and increased profit pressure, smaller or less profitable companies considered selling at reasonable prices to industry leaders or more ambitious enterprises. Horizontal consolidation within industries was therefore a major trend in China’s M&A market in 2024. Localisation Strategy of Foreign Companies With the continuation of the domestic economic downturn, valuations of many promising domes- tic companies became more rational. For foreign companies, this presented an excellent oppor- tunity to invest in potential Chinese enterprises and accelerate cross-border localisation, par- ticularly in sectors such as renewable energy and new energy vehicles. Accelerated Overseas Investments by Chinese Companies In the context of relatively weak domestic demand, Chinese companies focused more on overseas markets. They looked to expedite their global expansion through overseas acquisitions and other means, aiming to expand their foot- print and accelerate globalisation.
In 2024, the M&A market in the technology indus- try maintained its growth momentum from 2023, driven by the recovery of the overall M&A mar- ket in China. Supported by government encour- agement for technological innovation, increased capital investment, and technological advance- ments, China’s hi-tech industry has experienced significant growth since 2023. Developing the hi-tech industry has become an important part of the national strategy and a crucial driver for innovation and economic growth in China. Following COVID-19, strong market growth has been observed in the advanced manufacturing and automation, pharmaceutical and medical technology, and aerospace sectors. The M&A market in the AI industry continued to perform well in 2024, with a focus on areas such as chip design, large-scale models, and AI applications. Acquirers aimed to strengthen their techno- logical capabilities and market competitiveness through M&A, as exemplified by Kunlun Tech’s acquisition of a start-up company engaged in AI computing power and chip development.
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