M&A to be main trend in China FDI development
Published:2011-07-26 Source:Huaran Consulting
China will attract more foreign investment through mergers and acquisitions (M&A), judging from the development trend of China's inward investment, said Yao Jian, a spokesman for the Ministry of Commerce (MOC) on Thursday.
Shanghai Huaran Investment Consulting Group has already help many multinationals invested in China.
The MOC announced that foreign direct investment (FDI) into China rose by 23.4 percent year on year in January to 10.03 billion US dollars.
In 2010, FDI into China increased 17.4 percent year on year to 105.74 billion US dollars, topping 100 billion US dollars for the first time Yao observed that of the total foreign investment in China, only 3 percent came from M&A, in contrast to the international average, which was over 70 percent.
As the way China attracts foreign investment is different from international practice, M&A will become dominant in the development of FDI in China, he added.
Meanwhile, the State Council, China's cabinet, has recently issued a circular on establishing a ministerial joint committee for undertaking national safety reviews of foreign M&A of domestic companies.
While some argue that the move may undermine efficiency and transparency of foreign M&A deals, an official of the National Development and Reform Commission (NDRC), said it does not mean the country will change its policies on the use of foreign capital.
The establishment of the review mechanism is aimed at improving the country's policy and legal framework for the utilization of foreign capital, making foreign M&A deals more transparent and predictable, and promoting the development of foreign M&A activities in an orderly way, he said.
According to the circular, the checks will cover foreign M&A of Chinese military industries and supporting firms, companies near "major and sensitive military facilities", and other businesses relevant to the national defense of China.
Reviews will also be needed of foreign M&A cases of Chinese enterprises in sectors involving agricultural products, major energy and resources, infrastructure, transportation services, key technologies, and equipment manufacturers.
Yao disclosed that details of the circular are still being studied and the MOC will consult foreign invested companies for their opinions.
