The way corporate China woos The Chinese have their own twist on the adage about not replicating past follies. Chengqianbihou or "Learn from your mistakes to avoid repeating them." That seems especially apposite now, as China National Offshore Oil Corporation, the state-controlled group, awaits a final decision on its proposed $18bn take­over of Nexen, one of Canada's biggest energy companies with assets around the world. For it is only seven years since Cnooc attemp­ted a similarly ambitious deal in the US, only to be spectacularly rebuffed. In 2005, Chevron offered to buy Unocal, the ninth-biggest US oil company, for $16.7bn excluding debt. But Cnooc, largely unknown in the country, quickly trumped Chevron's bid with an offer of $18.5bn. The surprise move caught everyone off guard. Energy executives were stunned to see China's appetite for natural res­ources stretching so far, so fast. US regulators were driven into a rhetorical frenzy in the face of what they perceived as an aggressive Chinese acquirer. And Chevron, thinking it had secured a prized asset, was forced to go on the defensive. A huge lobbying effort, led by the US group, swept across Washington and prompted congressional hearings, while failed to muster a strong justification for its bid or reassuran­ces that its motivations were benign. The House of Representatives quickly passed a non-binding resolution calling for an immediate investigation by the Committee on Foreign Investments in the United States (Cfius), saying the deal "would threaten to impair the national security of the United States." Before that review could reach a conclusion Cnooc withdrew, paving the way for Chevron to ac­quire Unocal for a sweetened $17.4bn. Memories of the fiasco remain fresh for Cnooc and its many advisers. A senior deals lawyer in New York says: "[Cnooc] have come to the conclusion that there are some deals they're never going to get done, but there are some we should be able to get done." Other state-owned res­our­ces companies have similarly focused on deals that they believe are likely to win regulatory ap­proval. Most overseas investments by Chinese oil companies so far have been minority stakes in projects that were seeking funding. But with its bid for Nexen, Cnooc has shown it is looking to move on from Unocal. And it has worked hard to learn from past mistakes. Central to its recent efforts have been savvy, western-educated executives, such as Yang Hua, president of Cnooc group, the state-owned parent of the listed Cnooc Ltd, who is viewed as one of China's best dealmakers. Mr Yang was chief financial officer of Cnooc's listed entity during the Unocal bid. So this time, rather than catch a target off guard, he took his time courting it to lay the groundwork for a bid. One rainy day in July this year, Mr Yang walked into a west London hotel to meet oil industry veteran Barry Jackson, who chairs the board of Nexen. Cnooc officials had floated an offer at a meeting in Vancouver two months earlier and the Nexen board had rejected it as too low. But on that chilly Tuesday, Mr Jackson and Mr Yang struck an agreement that would pave the way for the acquisition effort and China's return to large-scale, public market takeovers. Mr Yang's delicate strategy, in which Cnooc made a friendly approach followed by a higher offer, was crucial to getting the deal this far, with regard to both Nexen and to regulators, and just one of many ways in which the Chinese group adjusted its approach to deals. China Inc looks global June 2009 State-owned trader Minmetals buys Australian miner Oz Minerals for $1.4bn, after revising the deal to address national security concerns. March 2010 Carmaker Geely buys Volvo cars for $1.8bn from Ford Motor. Dec 2010 China's State Grid, the world's largest utility, buys electricity transmission lines in Brazil for just under $1bn. It makes a slightly smaller purchase 18 months later. July 2011 Cnooc buys Opti Canada, an oil sands producer that was facing insolvency, for $2.1bn including debt. Dec 2011 Shandong Heavy Industry acquires Ferretti, the luxury yacht-maker based in Italy, for $663m. Jan 2012 Sany Heavy Industry and Citic PE Advisers buy Putzmeister, a German maker of high-end concrete pumps, for €360m excluding debt. Feb 2012 Minmetals buys Toronto-listed Anvil Mining, a junior miner with a copper asset in the Democratic Republic of Congo, for $1.3bn. May 2012 Real estate conglomerate Dalian Wanda buys AMC Entertainment, the US's second biggest cinema chain, for $2.6bn. It is the largest US acquisition by a private Chinese company. May 2012 Chinese food company Bright Food buys a majority stake in cereal maker Weetabix, valuing the UK company at £1.2bn including debt. Aug 2012 Shandong Heavy Industry acquires a majority stake in Germany's Linde Hydraulics and a minority stake in German forklift maker Kion, the parent of Linde, in a deal worth €738m. Another was that this time Cnooc had an intimate knowledge of the target company's market - and the target itself. In 2011, by which point Mr Yang was chief executive, Cnooc bought bankrupt oil sands producer Opti Canada for $2.1bn. Opti's main asset was its 35 per cent stake in the Long Lake oil sands project in Alberta, in which Opti's partner was Nexen. Cnooc worked closely with Nexen to tackle the challenges at Long Lake. Handling the project for the Chinese group was Fang Zhi, general manager of subsidiary Cnooc International. Within a year of the Opti acquisition being announced, Mr Fang was working on buying Nexen, attracted by the Canadian company's broad range of assets. "The key on the Nexen deal is understanding Long Lake," says a person close to the bid. When Cnooc bought out Opti they showed they believed in Long Lake and believed they could fix it. These experiences convinced Cnooc that Nexen was worth pursuing. The final piece of the puzzle for Cnooc was to make sure it avoided the sort of political backlash that killed its Unocal bid. In the wake of the failed bid, the Chinese group revamped its approach to governmental and media relations, according to people familiar with the company. "Cnooc has been on a charm offensive ever since the Unocal deal," says a Washington lawyer familiar with the group's operations. To help garner Canada's support, Cnooc decided to move its North American headquarters to Calgary, keep on all Nexen staff and even consider a secondary listing on the Tor­onto stock exchange. "It was a priority from the very beginning to understand not only what the [legal] requirements were, but also to understand what the government and the industries require," says a person close to the bid. It was here that its work on the Long Lake oil sands project paid off. They had already invested in Canada through Opti. They had gotten to know the provincial and federal regulators and spent some time to get to know the communities," says another person close to the deal. Before the deal was announced on July 23, the Chinese group also informally approached officials in regions where Nexen has assets, including Canada, the US, UK and Nigeria, to prepare them. The responses were not definitive but were warm enough to be reassuring, according to one senior member of Cnooc management. "Part of talking to people on Capitol Hill is not so much to win their support but to neutralise them," says the New York deals lawyer. All that work looks to have been worth the effort. Nexen's shareholders have almost unanimously agreed to accept Cnooc's bid, which offered them a 61 per cent premium for their shares. At the same time, the political climate is less hostile. Hurdles for the deal remain - both Canadian and US regulators have yet to clear the deal, with Cfius, which is involved because of Nexen's assets in the Gulf of Mexico, having postponed its decision last week. A final decision from Canada is due by December 10. Cnooc, some dealmakers say, was ahead of its time with Unocal. In the words of one oil industry adviser: "The problem with being on the front foot is sometimes you get your toes chop­ped off."