As they shop overseas for resources and assets lacking at home, ambitious Chinese companies are learning the pitfalls of trying to build overseas empires.
They've acquired technology and brand names through a series of large foreign acquisitions, capped by Lenovo Group's (聯想) announcement last December that it was buying IBM's PC business.
But the on again, off again courtship between bankrupt British automaker MG Rover and Shanghai Automotive Industry Corp (SAIC, 上海汽車工業) highlights the problems that can doom such deals.
On Tuesday, SAIC said it had no intention of taking on the role of white knight to the struggling British company, which was put into administration, a form of bankruptcy, last week after negotiations with SAIC collapsed.
"It remains highly unlikely that SAIC would wish to become reinvolved whilst MG Rover is in administration," said Rupert Pittman, the Shanghai-based company's spokesman in London.
SAIC was put off by the potential cost if the venture failed.
"SAIC doesn't have a global brand name and they potentially could get one," said Bob Broadfoot of the Political and Economic Risk Consultancy in Hong Kong. "But what price do you pay for a brand name?"
In some cases, Chinese plans to buy up foreign corporate assets have run afoul of regulatory or financial problems.
Lenovo's US$1.75 billion plan to buy IBM's personal computer business was approved by US regulators. But it initially ran into snags over security concerns about China acquiring technology that might be used in making weapons.
A plan by China Minmetals, a state-owned metals trading company, to buy Canadian mining company Noranda Inc fell through after Noranda took on a subsidiary that made the company too expensive.
The proposed Noranda takeover also had caused an uproar in Canada, with critics complaining that the country was losing control of its economy.
In other cases, acquisitions have been dogged by conflicts over labor rights or financial troubles back home.
In Britain, the proposed deal with SAIC, one of China's three big state-controlled auto companies, was viewed as a potential lifesaver for MG Rover.
SAIC says it never intended to buy Rover outright and that negotiations had been only for a joint venture. SAIC decided against even that after discovering it might have to repay a ?427 million (US$808 million) interest-free loan to MG Rover from former owner BMW.
BMW sank US$4.1 billion into MG Rover before selling it in 2000 to a group of British businessmen.
Still, speculation persisted that SAIC had not given up on acquiring at least some Rover assets.
"Rover Applies for Bankruptcy; SAIC Still Interested in Buying Assets," said a headline Tuesday in the state-run newspaper China Business News. It cited an unnamed source close to SAIC who it said told Chinese reporters that the automaker would find it hard to give up on Rover.
Although talks are over for now, PricewaterhouseCoopers, which is administering Rover, could eventually approach SAIC with a new offer.
SAIC, which has more than 60,000 employees, has thriving partnerships with both Volkswagen AG and General Motors Corp in what has become the world's biggest auto market.
But it makes cars under license and has no brand names of its own.
The deal with Rover was seen as a way for SAIC to acquire technology and expertise, plus a European manufacturing base.
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