M&A Regulatory Updates in China and Abroad 

  • China is loosening its investment regulations while many other countries are doing the opposite.
  • In India’s case, they are showing a selective tightening of M&A rules.
  • On the global M&A market, politics often come into play when defining the rules of the investment game. 

Eastern countries are on the rise in the M&A market, however, this trend may have been obscured by the current global health situation as well as geopolitical tensions. During one of the panels of the China Cross-Border M&A and Private Equity Investment Forum that took place in August, business experts discussed how tightening regulations and redirected capital flows may impact the M&A situation in the Asia-Pacific region. 

China is welcoming investment but facing trouble investing abroad

‘Overseas investment is still very welcome here. The regulation of inbound investments in China is not as strict as it is in many other countries’, says Chen Bing, Partner at King & Wood Mallesons. He says, Beijing has been taking down many of its previous regulations and loosening the existing ones. 

Meanwhile, business sensitivity to politics is increasing in China and also in some other countries. For instance, with the escalation of Sino-American tensions, Canberra has started to treat Chinese capital more rigorously. As the University of Sydney calculated, Chinese investment in Australia fell 58 percent YoY in 2019. The numbers may go down further, researchers suggest, as Australia mirrors the tighter FDI screening policies of several western countries, including the USA, Canada, and members of the EU.

In turn, China has not become stricter than it was before, Chen points out. Moreover, Beijing, as well as several local governments, is considering possible new incentives to boost inbound investment. ‘Despite negative comments about China in Australia, or the troubles met by Huawei in Canada, China is welcoming investments from these countries,’ says Chen Bing.

In terms of outbound M&A activity, he adds, globally China is facing challenges. For instance, he mentions the tightened rules for Chinese capital in the US, namely the changes to the CFIUS rules. The scope of the CFIUS review, Chen believes, is too broad. The new regulations on the Australian and the EU markets are also making it harder for Chinese businesses to invest there. 

India: tensions with neighbors and a booming IT industry

Recently, lots of Chinese companies started investing in India, considering the country a strategic location. Despite this trend, Chen points out, the Indian government is also tightening M&A regulations for the countries it shares a border with. According to data gathered by Bloomberg, companies from China planned to invest about $579 mln in Indian companies in the 1H2020, down from $1.5 bn for the same period in 2019.

The situation between the countries gets more complicated due to the tensions on the disputed China-India border. Nevertheless, the panelists suggest a further slowdown in Chinese investment in India this year. Some of the investors prefer a ‘wait and watch’ strategy, especially in terms of the Covid-disrupted global economy.

Despite strained relations with its neighbors, India is actively attracting global investments, the leading sectors being IT and Telecommunications. For instance, this spring, Facebook invested $5.7 bn for a 9.99% stake in Jio Platforms, the digital technology branch of the Indian digital services conglomerate, Reliance Industries.

Geopolitics coming into play

‘Earlier, M&As and investment were easier to deal with,’ admits Josh Shin, Partner at Fangda Partners. Today, he adds, regulations and deal proceeding are heavily impacted by geopolitical issues as governments all over the world introduce new tools to tighten control over M&A activities. 

The experts at the forum recommend investors pay extra attention to the following:

  •  Antitrust regulations.

These rules are already being used quite frequently to uphold national security, says Shin. In his opinion, we’ll see such regulations being applied even wider in the future.

  • Availability of free trade zones.

‘We can hardly imagine the future without the free flow of capital’, stresses Chen. As an example of a perspective model, he mentions Shanghai’s pilot ‘free trade zone’. 

  • Specifics of the industry to invest in.

One can expect further tightening of regulations for the industries which are actively developing technological know-how, especially the ones connected to public health and medicine. Companies conducting research in the human genome field are typically heavily protected by government regulations, says Shin.

What about the future? China will create more investment-friendly policies and facilitate M&A transactions, the panelists think. “A bigger uncertainty is on the other side of the ocean. The US-listed Chinese companies will sooner or later quit, moving to either China or Hong Kong. This will be a great opportunity for M&A deals,’ predicts Josh. 

Other Insights

See More
USA
digital assets

Acquisition and Integration of Digital Assets

In the last 15 years more than 52% of US listed companies have disappeared, and while the average life of such a company in 1955 was 61 years,...

See More
Portugal
green energy

The Ins and Outs of Becoming a Player in Portugal’s Green Energy Market

Portugal has seen a rapid expansion of investment in renewable energy in recent years, especially in solar PV. There has been considerable...

See More
Brazil
spain

M&A Community Webinar: Infrastructure Insiders Discuss Opportunities and Bottlenecks

Cleverson Aroeira (BNDES), Venilton Tadini (ABDIB), Elias de Souza (Deloitte) and Thiago Costa Monteiro Caldeira (PPI) untangled the sector and...

See More
Russia
Agriculture

Will Smart Farming Make Agriculture More Sustainable? An Interview with the Founder of iFarm

Digitization in agriculture can help use resources efficiently and rationally, allowing farmers to get the most out of the outcome.

See More
Russia
iFarm - vertical farm in Finland
Agriculture

Innovations in Agriculture: A Lucrative Field for Investors

Investor interest in vertical farming surged in 2020, reaching $929M in the US alone.

See More
Russia
M&A Agriculture
Agriculture

What’s Happening in the Agribusiness in Russia? An M&A Point of View

Crop production seems to be the most lucrative segment in Russian agriculture as the demand is substantially higher than the supply.

See More
USA
Health Tech M&A
Healthcare

Telemedicine is Changing the Healthcare Landscape: Expert Outlook 2021

With several new coronavirus strains circulating, it is hardly likely that the healthcare industry will soon escape from this period of...

See More
USA
M&A AI Tech
Tech

M&As in the AI Market: Tech and Deals Explained

The artificial intelligence (AI) industry survived its ‘winter’, in terms of limited hardware capacities, some time ago. Now, this sector seems...

See More
USA
Bruce Molloy
Tech

AI Industry: What Any Business Leader Should Know

Business leaders can understand what AI can do in straightforward ways, including the opportunities it creates, the problems it solves, and the...

See More
USA
Healthcare

The Post-pandemic Health Industry: Tech Is Poised to Play a Much Bigger Role

The next normal presents itself with emerging opportunities, challenges, and new health tech use cases in the US, and globally.

See More
Brazil
Sao Paulo, Brazil
M&A

Experts Show Optimism for the M&A Market in Brazil in 2021

Economic recovery in a Brazilian context will involve greater liquidity and an enormous structural change.

See More
Brazil
The National Congress of Brazil
M&A

The LGPD to Attract More Foreign Investment to Brazil

With the LGPD, the business environment will have more clarity about the regulations to be made a clearer perspective for foreign investors.

See More
New Normal
M&A

M&A: Getting Used to the ‘New Normal’ 

Political and geopolitical tensions worldwide may also hint at the events we might see in the nearest future. What are the main currents in the...

See More
Portugal
Oporto, Portugal
M&A

M&A in the North of Portugal: Tough Situation, Plenty of Opportunities

The outlook of the mergers and acquisitions landscape in the north of Portugal.

See More
Reva Goujon
M&A

‘Strategic Scenario Planning’: Reva Goujon — about resilient M&A Approach, US-China Rivalry, and Cyber Influence Ops 

How to design smart and resilient M&A strategies amidst global uncertainties?

See More
Russia
moscow city
M&A

M&A in Russia: Negative Trends with a Silver Lining?

Despite several periods of turbulence, and downturns, the Russian M&A market ‘is still alive’.

See More
USA
Crossroads
M&A

Global Business Climate, Geopolitics, and M&A: Where we are at now 

Everyone, from small firms to large corporations, has to adapt to the new realities and find new ways to stay afloat.

See More
USA
Tech

‘AI Hype’ and M&A: Artificial Intelligence Strategies and Putting a Value on a Deal

How AI technologies can create value for different industries, and what to consider during any AI-related M&A transaction.

See More
Ignacio Tornero
M&A

China Goes Overseas: The Successes and Challenges of PRC in Latin America. An Interview with Ignacio Tornero

Digging deeper into the Chinese expansion in Latin America.

See More
USA
Tech

Tech, M&As and their Future: Reality and Expectations

From the valuation of AI assets to IoT, blockchain, and ESG (Environmental and Social Governance) in business.

See More
Portugal
Porto, Portugal
Legal

Legal Frameworks for Turbulent Times: Cases of Distressed Investments in Portugal

Are there ways to prevent the wave of insolvencies expected in 2021?

See More
USA
M&A

Geopolitics and M&A: Power Play in the Turbulent World. An Interview with Klisman Murati

How do geopolitics define the long-term strategies of states, and impact the economic actors?

See More
Portugal
M&A

Distressed Investments in Portugal: An Economic and Legal Outlook

The number of insolvencies in Portugal is rising and businesses are facing uncertainty in terms of future financing.

See More
USA
Hong Kong harbor
M&A

China’s Gordian Knot of Geopolitics: Regional Expansion or Global Ambitions?

Though Beijing is being careful with international politics, in an economic scene it is more active.

See More
Israel
Healthcare

China and Russia: Behind the Scenes of Healthcare and Biotech M&As

How is the M&A landscape in the healthcare industry changing?

See More
USA
Investment

The US vs. China: How their Geopolitical Game is Affecting M&As

Beijing remains cautious in terms of restrictive measures against the US in response.

See More
Israel
Healthcare

Changing Landscapes in Chinese, Russian, and Israeli Healthcare Investments 

The healthcare and life sciences branches seem to be struggling with the new challenges.

See More
Australia
M&A

Four Human Capital Factors to Consider during an M&A Deal

Without the proper management of human resources, the majority of M&A deals are bound to fail.

See More
Australia
M&A

Extracting Commercial Benefit from Data: Lessons for M&As

Data can be applied and bring value at various stages of the M&A process.

See More
Brazil
Legal

LGPD in Brazil: How the New Data Protection Law is impacting Businesses and Deals

Here are some useful hints and recommendations by experts in the field

See More
M&A

Global M&A: Is a Recovery in Sight?

The full impact of the coronavirus crisis has manifested itself in Q2 2020. Here’s a brief overview of the global M&A situation in Q&A.

See More
China
M&A

Trends That Are Defining Cross-Border M&A in China

The global M&A market is showing a strong decline: it has more than halved to $0.9T in the first half of 2020.

See More
USA
Inner city investment in the USA
Investment

Three Cases to Describe the Progression of Impact Investing 

Investors wanting more societal changes are fueling growth in impact investing, allocating capital to assets that push positive changes forward.

See More
USA
Investment

Paradigm Shift in Impact Investing: Trends to Influence Businesses in a Post-Pandemic World

While the world is living through turbulent times, businesses and investors cannot stand aside unaffected. To dive deep into the issues of...

See More
China
Energy

Global Energy Investments and M&A: A Quick Guide

The chaos this year on the oil market seems to have echoed into other energy sectors, leaving investors in a state of uncertainty. However, this...

See More
China
Energy

Investment Opportunities and Risks in the Global Energy Industry

2020 looks like being the biggest black swan event since WWII. The global pandemic has affected the mentality of investors all over the world....

See More
China
legal service
Legal

The Role of Legal Service Providers in Cross-Border M&A

In recent years, an increasing number of Chinese companies are seeking international expansion in response to the nation’s “Go Global” campaign....

See More
China
business mna
M&A

How to improve bid success rate in cross-border M&A

Initiated by iDeals and co-organized by several key players in the cross-border M&A industry such as KPMG, Eurasian, and GORG, the China-EU...

See More
China
mna community
Investment

M&A Community In-depth Interview: The Three Key Questions in China-EU M&A

Recently, iDeals hosted the M&A Community: China-EU Cross-border Best Practice Sharing event in Shanghai.

Speakers of this event

See More
China
Wei Lu M&A Community

Wei Lu

Mergers and Acquisitions Director, Faurecia
See More
China

Mathias Boyer

Chief Representative, Danske Bank
See More
China

Xiaoshu Wang

Senior M&A Counsel, Tencent
See More
China

Chen Bing

Partner, King & Wood Mallesons
See More
China

Daniel He

M&A Partner, JunHe LLP
See More
China

Josh Shin

Partner, Fangda Partners
See More
China

Tony Wang

Partner, Nordic Match
See More
China

Penny Chu

Financial Advisory Director, Deloitte
See More
China

Anita Ding

Senior M&A Partner, Deloitte
See More
China

Jay Chan

Founder, Partner and CEO, FOF Weekly
See More
China

Ruifen Xu

Founding Partner, RIC Capital Management
See More
China

Ian Tu

Vice President of JinkoPower International
See More
China

John Yuan

Head of M&A Community China
See More
China

Stanley Geng

Partner at Nebula Advisors
See More
China

Josh Lim

Founding Partner and Executive Director, IJK Capital Partners
See More
China

Kenneth Koo

Managing Director at Orient Securities Investment Banking (OSIB)

Get In Touch

Our team is happy to answer your questions. Fill out this form and we will get in touch with you.