HONG KONG -- Having long played factory to the world, Chinese manufacturers now yearn to prove the worth of their own products on the global stage. But the image of cheap, inferior wares is not easy to shake, driving the companies to go after major global brands in hopes of gaining an instant boost.
In the latest such step, consumer electronics maker Midea Group said Thursday evening that it has signed a memorandum of understanding on acquiring Toshiba's white goods business. Toshiba also agreed to sell an Indonesian television and washing-machine production base to Chinese consumer electronics company Skyworth late last year.
The Sina news portal reported the day before that major Chinese consumer electronics company Haier Electronics Group plans to buy WMF Group, a 160-year-old German maker of upmarket kitchen products. This followed Haier's announcement in January that it would purchase General Electric's home appliances division.
An acquisitive mood
The shopping spree was "triggered by the ongoing depreciation of the yuan," said Louie Shum Chun-ying of Sincere Securities in Hong Kong.
Amid growing expectations that the currency will weaken further, Chinese businesses feel more compelled to acquire overseas businesses while they can get more bang for their buck. And consumer electronics companies are not alone on the hunt. China National Chemical Corp., or ChemChina, plans to acquire Swiss agrochemical giant Syngenta.
In Chinese acquisitions of Japanese consumer electronics businesses, the stars seem to have aligned because the targets were seeking buyers and the Chinese companies were looking for acquisition opportunities, an analyst at a Hong Kong brokerage said.
But Chinese companies are not necessarily trying to get their hands on advanced technologies through those purchases.
"Chinese companies' technological levels are not so different even compared with those of Japanese companies nowadays," Shum said.
It is their thirst for brand power that has driven Chinese businesses toward big overseas acquisitions.
"The gap between Chinese businesses and major global companies, such as Apple, is still wide when it comes to brand power," TCL Chairman Li Dongsheng said at the National People's Congress, the Beijing Business Today newspaper reported online Monday.
Even as Chinese manufacturers have churned out widgets for major global brands, their homegrown brands have been plagued by image problems. Many companies have the wherewithal to purchase reputable foreign brands as a way of instantly adding value. Their appetite will likely remain strong for some time.