China firms' Korea acquisition spree furthers Xi's new economy dream

Seoul

COMPANIES in China are buying their South Korean counterparts at a record pace, tapping into one of the world's most innovative countries to accelerate President Xi Jinping's push for an economy led by technology and consumer services.

Chinese investments in Korean companies soared 119 per cent this year to US$1.9 billion, led by deals in the insurance, technology, healthcare and cosmetics industries, according to data compiled by Bloomberg.

The acquisition spree is likely to accelerate as China seeks to hasten a transformation away from smokestack industries that South Korea began more than 20 years ago, according to Samsung Asset Management Co and Hyundai Securities Co.

South Korea's spending on research, patents and post-secondary education made the country No 1 on the Bloomberg Innovation Index in 2015, versus China's global ranking of 22. Listed Chinese companies, whose cash reserves rose 12 per cent from a year ago to 15.2 trillion yuan (S$3.3 trillion), are taking advantage of Korean know-how to serve a domestic consumer market that now accounts for more than half of the country's ec…