Becoming the world's factory has pretty much taken China's economy as far as it can. For a lot of Chinese companies, domestic economies of scale are now maxed out. China's corporate sector does not need to invest in and run factories that sell sneakers for Nike or toys for Mattel or auto parts for Magna. Chinese companies need to become Nike, Mattel, and Magna. They need, in consultant-speak, to move up the value chain. Another reason the Chinese are buying stakes in foreign companies -- or buying them outright -- is that so few domestic companies have experience operating in the U.S. or Europe. Everything -- from the regulatory and legal environments to auditing and consumer safety standards -- is alien to the Chinese. Arguably the most painless mode of entry for them is outright acquisition.

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