Chinese firms lack management skill in overseas deals-regulator

China's state-run firms' biggest challenge when making overseas acquisitions is a shortage of managerial expertise, not money, the chief regulator of state assets said on Sunday.

Li Rongrong, head of the State-owned Asset Supervision and Administration Commission (SASAC), said State-run enterprises have plenty of money as a result of various government supportive measures. In fact, their net profits in March rose 26 percent from a year earlier and 86 percent from the previous month, Li said at the Boao Forum on Hainan island.

However, "money is not enough for acquisitions," Li said, adding that many Chinese bosses do not understand the legal risks of foreign acquisitions.

A flurry of Chinese state companies and private businesses are seeking overseas buyout opportunities as the market values of many Western firms have tumbled during the global financial crisis.

Chinese state-owned aluminium group Chinalco, the parent of listed Aluminum Corp of China Ltd (Chalco) (2600.HK), made a $19.5 billion bid for Australian miner Rio Tinto (RIO.L) and is now awaiting regulatory clearance from various governments. If approved, it would be the largest overseas acquisition by a Chinese company.

Li also advised Chinese firms to pay close attention to stimulus measures offered by foreign governments and take those into account as they evaluate whether to invest overseas.

"These efforts will significantly affect our businesses," Li said.

The global financial crisis may end more quickly than people expect, Li predicted, adding that the most striking characteristic of the crisis is its ever-changing nature.

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