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JVs catalyst for medium-term growth

By Hu Yuanyuan (chinadaily.com.cn)
Updated: 2009-02-05 18:45

Joint ventures (JVs) and strategic alliances will play a greater role in business growth than cross-border mergers and acquisitions over the next three years, a report from PricewaterhouseCoopers said today.

More than half of the CEOs in Asia Pacific said they would choose JVs or strategic alliances, instead of cross-border M&As to fuel medium-term growth, according to PwC's 12th annual Global CEO Survey.

The survey also said it would not be an easy period for CEOs to achieve sustainable growth objectives. They will have to contend with lack of capital, tight credit conditions and uncertainty around company and asset valuations.

"For these reasons, collaborative arrangements such as JVs are becoming more popular among CEOs in order to spread the cost and risks associated with cross-border arrangements," said PwC Advisory Partner David Brown.

In a sign of tighter liquidity and falling business confidence, overall M&A activity has decreased. Only 19 percent of the Asia Pacific CEOs had completed a cross-border M&A during the past 12 months.