08/23/2010 03:38 pm ET | Updated May 25, 2011

From the Commune to the Condo

If at first you don't succeed, try, try again, Thomas Palmer, an American educator, wrote in the early 1800s.

You don't have to convince China of that saying. It's a firm believer.

In June of 2005, for example, state-owned China National Offshore Co. (CNOOC) made a bold effort to enter the U.S. business arena big time through an ambitious $18.5 billion offer to buy energy giant Unocal (Union Oil of California). Unfortunately, Congress was hostile, so was Unocal, and a deal never happened.

About a year ago, a Chinese delegation of engineers came to the United States to look at a uranium plant owned by a Southwestern publicly-owned uranium producer. It was all very hush-hush, and what, if anything, China had in mind was a mystery. The company itself didn't know, but a few people privy to the visit speculated to me that China was likely interested in fattening its uranium base through some sort of a partnership or perhaps a buyout. Again, nothing happened.

Wait, there's more. In Hong Kong banking circles last week, there were rumblings that a group of Chinese investors was being formed to raise funds for a proposed buyout of a global luxury retailer with stores in the United States. It was unclear whether this was a U.S. or foreign-based company.

Whether anything materializes is anybody's guess, but I'm told by Mark Saunders, president of Achelous Partners, LLC, a New York investment banking firm specializing in small company acquisitions globally, that a conspicuous Chinese entry into Corporate America is on the way. China is hungry to snare U.S. companies as a way to get access to the American market, and it has the funds to do it, he says.

"Chinese capitalism is coming to America, definitely," he says, "and make sure to spell definitely with a capital D."

Based on his experiences, Chinese companies, Saunders tells me, are the most actively engaged of any in overseas markets that are seeking acquisitions of American firms. In fact, Achelous, he says, is currently involved with six Chinese companies that are presently in talks to buy private and public American firms in an effort to broaden their economic base.

Most of these potential buyouts by Chinese companies center on life sciences -- namely pharmaceutical firms, makers of medical devices and drug distributors. Software technology is another area of Chinese interest.

Saunders figures that one or two of these potential deals his firm is working on should become a reality within the next three months. Such acquisitions usually take longer than usual because of the lengthy time involved in obtaining the approval of Chinese banking authorities.

Based on the current tempo of takeover activity being explored, Saunders estimates that overall, U.S. investment banks and merger-and-acquisition firms will help effect the purchases of about 30 to 40 U.S. firms by Chinese companies over the next 24 months.

That's in sharp contrast to the past. Years ago, if someone were to tell you a new Chinese venture was opening in your neck of the woods, you might have logically thought it was a Chinese restaurant or a Chinese laundry since both had ballooned on the U.S. business scene.

No more. The game has changed, what with China now the world's second largest economy and projected by the International Monetary Fund to grow a sizzling 10.5% this year, followed by an impressive 9.6% gain in 2011.

Meanwhile, China's populace is also anxious to spread its economic wings. That, in fact, is already happening. You can see it in such high-priced New York retailers as Gucci, Burberry, Hermes, Bergdorf Goodman, Coach and Tiffany, where the number of Chinese shoppers at times will outnumber U.S. shoppers.

"Thank heaven for the Chinese," says one Coach store manager, who notes that multiple purchases by Chinese shoppers exceeding $1,000 are a frequent occurrence.

In another big M&A development that could embrace the Chinese, last week Australian-based B.H. Billiton, the world's largest mining company, made a $40 billion offer -- which was rejected -- for Potash Corp., the globe's biggest fertilizer company. How this plays out is anybody's guess, but there's talk that Potash, to fend off Billiton, may seek the assistance of a Chinese white knight.

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