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The UK has fallen behind in the mergers and acquisitions (M&A) race for Chinese companies. Britain was the 13th largest acquirer by value in the first half of 2007 – a fall from eighth place in 2006 and second place in 2005, according to research from accountancy firm Grant Thornton.

From more than US$4.5 billion (£2.3 billion) spent on 15 companies in 2005, the UK’s spending on Chinese M&A deals has shrunk to $19 million – less than one per cent of that figure.

This is part of an overall trend of slowing acquisitions in China, with $11.5 billion worth of companies purchased internationally in 2006 slowing to just $1.9 billion in the first half of this year.

Stephen Weatherseed, head of Grant Thornton’s China group, comments: ‘The opportunities on offer in China are immense, but it seems the M&A focus in the UK has drifted away from this rapidly developing nation, possibly due to some of the regulatory difficulties that can hinder initial M&A attempts.

‘However, many UK companies that have determinedly pursued an acquisition in China are now reaping significant rewards.’

The US has retained its position as the number one acquirer of Chinese companies, with 27 deals worth $685.5 million in the first half of this year. Hong Kong is a close second, with 26 deals worth $618.2 million.

Other nations that have overtaken the UK in the Chinese M&A stakes include France, the United Arab Emirates and the Philippines.

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