Overseas direct investment by Chinese companies increased
significantly in 2016 to US$212 billion, a 143% increase from 2015.
While outbound M&A interest remains strong in China, recent
measures taken by the Chinese government to scrutinise transaction
fundamentals more closely and slow capital outflows may impact
deals in 2017. Consequently,
what should European corporates know and do in order to minimise
the risk of an aborted deal?
1. Why Do the Deal?
Chinese regulators are focusing on the authenticity and
commercial purpose of deals by Chinese companies. Acquisitions with
a solid rationale that benefit the Chinese economy are unlikely to
be rejected outright. So-called "irrational" deals
(outside of a Chinese buyer's core sector, particularly in the
real estate, media, sports or hospitality sectors) will face
greater regulatory hurdles and carry a higher abort risk. European
corporates and their advisers need to factor this into any approach
from a Chinese
