Industry Ministry to Forge Global Giants in the Electronics Sector
The industry ministry of China has set a goal of forging global giants for its electronic sector in the next two years by mergers and alliances. The ministry also reiterated its longstanding push for Chinese companies in exploring overseas acquisitions.
The goal is part of a wider plan that will consolidate China’s fragmented major industries ranging from shipping, steel, automobiles aluminum and cement. The recent overcapacity in these industries was blamed for amplifying the slowdown in the growth for the past two years. The Ministry of Industry and Information Technology change in its policy statement is part of a leadership transition that is hoped to be a new momentum to bring in economic changes as in the past years top economic agencies have repeatedly issued regulations that encourages companies to expand.
The electronic sector is an indication of the government’s desire to support higher yielding and branded companies and to leave an economy that is centered on low cost electronic manufacturing. By 2015 the ministry hopes to have around five or eight electronic companies that have sales of 100 billion yuan.
In 2011 only two companies have reached that mark, Huawei Technologies a telecom equipment maker and Lenovo Group Ltd. a maker of personal computers. Local electronics makers TCL and ZTE have been struggling to overcome the weak global demand and technological barriers along with the mistrust towards these companies have made it a challenge. Two of these companies namely Huawei and ZTE suffered setback in the U.S. as a congressional report said that these companies are a potential security threat in which both companies denied the allegations.