China cuts red tape for foreign firms buying into Chinese ones
August 7, 2017 Category Mergers & Acquisitions, Weekly
China has revamped one of its regulations to cut red tape for foreign firms buying into Chinese businesses, a move expected to ease the way for more mergers and acquisitions (M&As) as Beijing tries to expand inflows of foreign investment. Under updated regulations, foreign investors will only need to complete one set of standard forms and notify the Ministry of Commerce (MOFCOM) if it takes a stake in a local company – as long as the deal does not involve a monopoly or national security. The revisions are designed to eliminate some of the costly and labyrinthine administrative reviews that have held back foreign direct investment (FDI) in China. Conditions have deteriorated to such an extent that German Ambassador to China Michael Clauss said last year it was “more or less impossible” for a German firm to invest in China through acquisition. As a result FDI inflows into China have stagnated, amounting to CNY441.5 billion in the first half, down 0.5% from a year earlier. Vice Commerce Minister Qian Keming said that international competition to attract foreign investment was fierce but the latest data showed that the FDI inflows to China were basically “stable”. In June, China changed its investment guidelines to open up more sectors to foreign funds, and Premier Li Keqiang said that China would roll out its “free trade zone” policies across the country to open the domestic market wider to foreign investment by the end of September.
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