Firm intentions: China's corporate acquisition strategy

China's acquisitions of foreign firms that develop technologies that could benefit the People's Liberation Army (PLA) have declined in recent years, Janes IntelTrak data shows.

The decline is likely linked to increased international scrutiny of Chinese investment in local firms involved in these strategic sectors, which include aerospace, semiconductors, sensors, communications, navigation, robotics, and artificial intelligence (AI).

Despite this, Janes data also suggests that such corporate takeovers are likely to remain a crucial method for China in gaining access to foreign technologies in line with its increased emphasis on military-civil fusion (MCF).

During 2017–22 the number had declined by 25% to 42 foreign acquisitions. Again, most of these target firms were located in the US and involved in sectors such as visual recognition, AI, unmanned systems, Internet of things (IoT) technologies, semiconductors, navigation, and cartography.

In part, the difference between the two periods can be linked to variations in Chinese and foreign economies, which prompt firms periodically to either tighten their belts or look to secure inward investment.

However, it is the effort by foreign governments – including those in Australia, India, Japan, the US, and the United Kingdom – to ensure greater protection against investment from China in strategic technologies that is likely to have had the biggest impact on the Chinese acquisition strategy.