Clifford Chance | What Chinese companies must do to succeed in cross-border M&A

30 July 2010

What Chinese companies must do to succeed in cross-border M&A

Antitrust, competition, EU & trade, Asia, Banks, Bribery & corruption, China, Corporate advice, Corporate compliance, Demergers & reorganisations, Emerging markets, Financial institutions M&A, Financial services regulation, Government & public policy, Hong Kong, IPOs, Infrastructure funds, International, International Organisations, Investment management, Joint ventures & strategic alliances, M&A Corporate, Mergers & joint ventures, Mining, Mining & metals, Private acquisitions & disposals, Private equity, Private equity, Privatisations, Public takeovers & mergers, Returns of value, Trade bilaterals, WTO Law
Kathy Honeywood, Tim Wang
Client Briefing

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Chinese companies cross-border M&A

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The increase in Chinese companies acquiring overseas assets has highlighted a series of issues that they must address in their dealings with Western businesses and regulators if they are to continue to grow as a leading investor in the global M&A market.

Among the challenges facing Chinese companies are the complexities of their own country's approval processes for any overseas M&A activity. They have also to contend with the sensitivities of governments and regulators in some Western economies about the ownership and control of Chinese companies and the added concern about Chinese companies' ownership of sensitive assets such as natural resources.

Any Chinese business looking to use capital for overseas investment needs to have the deal approved by government authorities including the State Council, MOFCOM (Ministry of Commerce), NDRC (National Development and Reform Commission) and SAFE (State Administration of Foreign Exchange).

The process is further complicated for China's state-owned enterprises (SOEs) because they will also have to secure approval from SASAC (State-owned Supervision and Administration Commission).

Among the other issues that Chinese companies must consider in any cross-border M&A deal are identifying the best ways to structure the transaction, dealing with any foreign investment regulations, and ensuring the successful project management of the transaction.

The issues affecting Chinese companies that are looking to invest overseas are also examined by the Economist Intelligence Unit (EIU) in its report, A Brave New World: The Climate for Chinese M&A Abroad, which was published in March 2010. The report is sponsored by Clifford Chance, China International Capital Corporation and Accenture.

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