WHEN ride-hailing firm Didi Chuxing agreed to buy Uber Technologies’ China unit, creating a US$35 billion business, both firms used in-house advisory teams, meaning the investment banks that normally advise on these deals missed out on an estimated US$60 million in fees.

    China’s cashed-up and ambitious technology firms are increasingly spurning external advisers on acquisitions and investments in foreign companies. China tech mergers and acquisitions doubled last year to nearly US$68 billion, but fee volume only rose by around 60 percent, according to Thomson Reuters and Freeman Consulting data.

    Paying for advice is still a relatively new concept for Chinese firms, so they tend not to be big fee payers. While large conglomerates in developed markets have hired investment bankers to beef up in-house operations, they do still also use external advisers. The trend in China is to go in-house exclusively — as executives reckon the cost of external advice outweighs the benefit.

    Some Asia-based bankers privately acknowledge that the use of in-house advisers hurts their merger and acquisition business, and they want to work more closely with Chinese technology entrepreneurs to win back some of that work. But they point out that the main fee-making opportunities from these companies are in providing banking services, such as cash management and foreign exchange, and when firms plan to list their shares publicly.

    To build their in-house merger and acquisition and corporate finance teams, Chinese companies have been plucking talent from Wall Street banks — at a time when some large U.S. and European investment banks are cutting costs and shrinking their Asia footprint.

    This hired experience can be invaluable to some Chinese firms new to the international scene.

    “As we start to expand internationally, we really need more international people who can play critical roles because we need to be very close to the chairman, and he only speaks Chinese,” said Winston Cheng, a former head of Asia technology, media and telecoms banking at Bank of America, who was hired last year as global head of corporate finance at Chinese smartphone and electric car maker Le Holdings, also known as LeEco.(SD-Agencies)