Friday, December 10, 2004

Dragon in the American tent

No security alert or red flag went up when it was announced that a most celebrated icon of the US technology IBM was selling a part of itself to a Chinese company, Lenovo Group for a paltry sum of $1. 25 billion. Chinese companies, even when some of them don’t know how to manage themselves--Chinese Aviation Oil (Singapore) is a case in point--are nonetheless so ambitious that they are on an international hunt for acquisitions, especially for global brands.

IBM’s sale of its personal computer business would catapult Lenovo to become the third biggest computer company in the world, after Dell and Hewlett-Packard. “As Chinese companies move from prey to predator, they are also sitting on a powerful advantage: A possible currency revaluation. If the yuan rises 10 percent, 20 percent or even 40 percent analysts expect, overseas acquisitions of household-name companies and properties become that much cheaper. In other words we haven’t seen anything yet from China,“ writes Bloomberg’s William Pesek Jr.

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